Is it possible to become a Stocks and Shares ISA millionaire? Here are 4,560 people who’ve done it
s it possible to become a Stocks and Shares ISA millionaire? Here are 4,560 people who’ve done it
Having a Stocks and Shares ISA worth more than £1m is not impossible, based on recent figures from HMRC. According to a freedom of information request, 4,560 individuals have reached the milestone. Having said that, the data is a few years out of date. It relates to April 2022, so I suspect the actual number is a little higher.
The amount that can be invested each year has been steadily increasing. When the product was launched on 6 April 1999, the limit was £7,000. It was increased to £15,000 in 2014 and then to £20,000 in 2017. Itâs remained unchanged since.
This means that anyone who has held a Stocks and Shares ISA since inception, has been able to invest up to £330,000. Had they been fortunate enough to do this, they would have needed an annual return of 8.8% to get to seven figures.
Top of the pile
One way of trying to achieve a similar return is to buy dividend shares. And by coincidence, this is very close to the 9.1% thatâs currently (20 November) on offer from Legal & General (LSE:LGEN). This makes it the FTSE 100âs highest-yielding stock.
Of course, there can never be any guarantees when it comes to payouts. If earnings were to wobble then the dividend is likely to be cut.
As a rule of thumb, a stock yielding over twice that of the 10-year gilt rate should be treated with caution. At the moment, Legal & General is right at this limit.
Strong prospects
Even so, I remain optimistic that the pensions and savings group will be in a position to steadily grow its dividend from its current level. Indeed, the management team has pledged to increase it by 2% a year from 2025 to 2027.
Although this is likely to be less than the expected rate of inflation, when combined with planned share buybacks, the group claims itâs growing the amount returned to shareholders by 5% a year.
My optimism about the groupâs prospects stems from the fact that its pension arm has been winning lots of new business lately. And there could be more to come.
In October, it secured the UKâs largest pension buy-in of 2025 when it acquired two schemes from the Ford Motor Company worth £4.6bn. The group says it remains on track to reach its target of acquiring £50bn-£65bn of schemes from 2024-2028.
Pros and cons
But despite its attractive dividend, the groupâs share price has been rather lacklustre lately. Since November 2020, itâs fallen 9%. Over the same period, the FTSE 100âs risen by close to 50%.
This could reflect fears that the group operates in an increasingly competitive environment. It says itâs âcognisantâ of rivals that have lower capital requirements. And may be unaffected by UK regulatory rules concerning balance sheet strength.
Also, with over £1trn of assets under management, continuing global market volatility will make it harder to meet its obligations to pensioners.
However, the groupâs been around since 1836. It’s survived plenty of difficult periods before, including wars and economic slumps. But as well as appreciating its longevity, I remain attracted to the stockâs dividend.
Thatâs why I think itâs worth considering as part of a long-term well-balanced portfolio with the aim of becoming one of the near-5,000 Stocks and Shares ISA millionaires.
The post Is it possible to become a Stocks and Shares ISA millionaire? Here are 4,560 people who’ve done it appeared first on The Motley Fool UK.
Should you invest £1,000 in Legal & General Group Plc right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Legal & General Group Plc made the list?
More reading
- Up to 10.23%! Meet 7 of the FTSE 100’s largest dividend yields
- As markets dip Legal & General shares now yield a stunning 9.2%! Time to consider buying?
- At 9.2%, this FTSE 100 income share has the highest forward dividend yield in the index
- Iâm targeting £26,515 a year in retirement from £20,000 in this passive income gem!
- I asked ChatGPT to build me the perfect portfolio for earning a second income and it said…
James Beard has positions in Legal & General Group Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
