If I could only save one UK share in my SIPP, here’s what it would be

No investor should gamble their future on just one UK share. That would be an almighty risk.

My self-invested personal pension (SIPP) holds around 20 different stocks. While I would happily junk two or three of them (I’m looking at you Aston Martin, Glencore and Ocado Group), binning the rest would be painful.

But let’s say somebody put a gun to my head. Which would be the sole survivor?

Narrowing it down

There are some stocks that investors might buy if they knew in advance they could only hold one. Utility stock National Grid is seen as a solid dividend growth play, but I don’t actually hold it.

Consumer goods giant Unilever has both defensive merits. I did hold that, but recently banked a profit as I was underwhelmed by its growth potential.

So what about the stocks I do hold? Which would I save?

I’d hate to sell private equity specialist 3i Group, which has doubled my money in 18 months. It’s had a great run though, and looks a little bit too expensive, so it would have to go.

I’d also hate to offload insurer Phoenix Group Holdings, whose shares are up 30% in a year, and still yield a bumper 8.3%. It’s a happy day when the Phoenix dividend hits my SIPP, and the same applies for rival FTSE 100 wealth manager M&G. Another super-high yielder.

Yet both would have to go. If those dividends are cut at any time, the investment case could collapse. I don’t think they will, but the stakes are high here.

I’d also offload my SIPP growth stock stars Rolls-Royce Holdings and BAE Systems.

Lloyds is the stock I’d save

They’ve done brilliantly, but remember, I can only hold one stock here. I’d bank my profits on both to make way for last stock standing, Lloyds Banking Group (LSE: LLOY).

I bought the high street bank on three occasions in 2023, and it’s been the surprise over-achiever in my portfolio.

I hoped for modest share price growth. Instead, Lloyd shares are up 40% in a year (and 72% since I bought them). Once my reinvested dividends are added, my total return is almost 100% in 18 months.

Lloyds is now almost entirely focused on the UK domestic market, which makes it a play on our economic fortunes. There are good sides to that – but also bad ones. The UK economy isn’t exactly thriving right now, while inflation remains a menace.

Mortgage rates have actually been rising again in recent weeks, which could further squeeze house prices, and slow demand.

Income, growth and buybacks

Lloyds has also had to set aside hefty sums for potential debt impairments, and could be on the hook for a billion or two, following the motor finance mis-selling scandal.

But despite its strong run, the Lloyds price doesn’t look over valued, with a price-to-earnings ratio of just over 12. The forecast yield of 4.4% should keep the income flowing. Especially since it’s covered 2.1 times by earnings. The bank is also running a hefty £1.7bn share buyback.

Lloyd will have its ups and downs and like I said, I would be crazy to go all in on just one stock. But if I had to do it, this would be the one.