The Cash ISA is hugely popular. Too popular, in my view. While it’s a great home for short-term savings and an emergency cash buffer, this is no place to build long-term wealth for retirement. For that, the Stocks and Shares ISA will do a much, much better job.

And it’s not just me saying that. The Treasury agrees. That’s why it’s planning to cut the Cash ISA allowance for the under-65s from £20,000 to just £12,000 next April. The Stocks and Shares ISA allowance will remain at £20k for all. Why is it doing that? To encourage more people to access the long-term wealth building capacity of stock markets.

Do equities really outperform cash?

Over the last decade, the average Cash ISA paid just 1.21% a year, financial website Unbiased says. By comparison, the average annual return on a Stocks and Shares ISA, with dividends reinvested, was 9.64%.

So £20,000 saved in the average Cash ISA would be worth £20,242 after one year. In the average Stocks and Shares ISA, it would grow to £21,928. That’s £1,686 more. I’ll admit that’s a slightly daft comparison. Over such a short time scale, the Stocks and Shares ISA could go anywhere. It could easily rise or fall by up to 20% or more. Cash won’t.

That short-term volatility is a price worth paying given the long-term wealth building firepower that shares bring to the table. Over the typical investment lifetime of 30 years or more, the difference is massive.

Given the above performance figures, the Cash ISA would turn £20,000 into £28,690. But the Stocks and Shares ISA would absolutely transform it into £316,301.

A popular way to invest is to buy a spread of FTSE 100 stocks, which offer both share price growth and dividend income. Insurer and asset manager Legal & General Group (LSE: LGEN) now offers the highest trailing yield on the entire blue-chip index, a stunning 7.6%. Any share price growth is on top of that. I bought it for my SIPP three years ago.

Do Legal & General shares have growth potential too?

Those dividends should ideally be reinvested while you’re of working age, to build your position, then drawn as income in retirement to top up your State Pension and any other savings you may have.

That dividend income should rise over time, which will help to protect its value against inflation. Over the last 15 years, Legal & General has increased its dividends by an average rate of 10.7% a year. This isn’t guaranteed though. The company has to generate enough cash to do that.

Sadly, Legal & General shares have disappointed lately. In fact, they trade at similar levels to a decade to go. But there are signs of a pick-up. Over the last year the shares have grown 12.7%. Combined with that trailing yield, the total one-year return is more than 20%.

Legal & General operates in a tough and competitive market. If we suffered a wider stock market crash, that could hit the value of the £1.2trn worth of assets it holds, reducing fee income. No stock is without risk. Yet I think the ultra-high income and the prospect of a share price recovery makes it worth considering today.

Should you invest £5,000 in Legal & General Group Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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?

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Harvey Jones owns shares in Legal & General Group.

I’ve been keeping a watchful eye on a struggling UK dividend share with huge recovery potential. Now it’s starting to move.

The company is FTSE 100 housebuilder Barratt Redrow (LSE: BTRW). Like pretty much every other UK housebuilder, it’s had a torrid decade. I decided the negativity had gone too far, and the stock was starting to look good value again.

But first, let’s look at why it’s done so poorly.

Why has this UK blue-chip struggled?

Barratt Redrow shares are down 60% over five years, and 36% in the last 12 months. Interestingly, this mirrors the performance of other UK big builder peers, including Persimmon and Taylor Wimpey, which have all been hit by factors entirely beyond their control.

The sector sold off heavily after the shock 2016 Brexit vote. More recently, it’s been hit by resurgent inflation, which has driven up mortgage rates and made UK property even less affordable. The end of the Help to Buy scheme in 2023 then snatched away a key plank of buyer support.

In a further blow, FTSE 100 and FTSE 250 housebuilders have also had to fund a remediation bill of more than £3.5bn to make their cladding safe following the Grenfell Tower disaster.

On the plus side, the Bank of England started cutting interest rates from August 2025 as inflation fell, and more cuts were expected this year. Spirits and share prices rose, but then the Iran war drove the oil price and inflation back up.

Today, markets are betting on some kind of Middle East resolution. As a result, the Barratt Redrow share price jumped 11.25% in the last week.

That makes it the third fastest growing stock on the FTSE 100. It was beaten only by Segro, the subject of a takeover bid, and 3i Group, which posted some upbeat results. There were no results from Barratt Redrow. This was purely down to market sentiment, as investors decided its shares were potentially undervalued.

Can the Barratt Redrow share price continue to recover?

If the Middle East situation calms, and oil prices and inflation retreat, mortgage rates should fall too. There’s talk of inflation falling back to 2% next year, which might revive buyer demand and prices. Investors are keen to get in early.

Barratt Redrow shares still look decent value, with a forward price-to-earnings ratio of just 11.6. The trailing yield is stunning 6.23%, but a word of warning: the board has cut shareholder payouts, and the forecast yield for 2026 is notably lower at 4.87%. That’s still above the FTSE 100 average of 3.3% though.

Last week’s jump could prove yet another false dawn. The sector has seen more than its share of those. Building homes in this country isn’t easy, due to planning rules and labour shortages. The Employer’s National Insurance hike and two large Minimum Wage increases have squeezed margins. The London market is struggling.

I think Barratt Redrow is worth considering with a long-term view, but a word of warning: any recovery is likely to be bumpy.

Should you invest £5,000 in Barratt Redrow right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Barratt Redrow made the list?

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Harvey Jones owns shares in 3i Group and Taylor Wimpey.

Workers on the National Living Wage need a £1,443 second income to maintain a decent standard of living. That’s according to the National Living Wage Foundation.

The stock market can’t fix everyone’s problems. But for those with spare cash, it might be able to help plug the gap. 

A sell-off worth examining

Unilever (LSE: ULVR) shares have had a rough few months. Investors reacted badly to its $44.8bn deal to combine the foods business with McCormick. 

The stock fell 5% on the news and various analysts expressed their disappointment. But I see an opportunity worth examining.

The critics make two main points. One is that Unilever brought in a new chief exec to turn the business around, not to sell it. Some investors thought the appointment of Fernando Fernandes as CEO was to reinvigorate growth in the food division. But what were they hoping for? 

Kraft Heinz posted a 3.4% organic sales decline in 2025 and guided for a further fall in 2026. Meanwhile, Campbell’s has ruled out 2026 sales growth entirely, with net sales down 4% this year. In short, foods businesses across the board are struggling. Unilever’s brands weren’t waiting to flourish — they were waiting in line with the rest of the industry.

Given this, getting rid of the foods unit doesn’t look like a bad move. At least this way it stops holding back the firm’s other divisions.

The deal argument

On the other side, the deal isn’t what investors were hoping for. Those who wanted to be rid of the foods division find themselves still owning most of it. 

The deal is structured as a Reverse Morris Trust. Unilever retains a 9.9% stake, which it intends to sell down gradually, while its shareholders will own 55.1% of the combined entity.

That’s not a clean exit — and with it comes residual exposure to GLP-1 headwinds and consumers trading-down. Which might be exactly the risks the firm was trying to get away from.

But what was the alternative? The market for packaged food assets isn’t exactly thriving right now. I think management might have done as well as possible.

A stock to consider

What remains as Unilever is the more interesting business. Beauty & Wellbeing delivered underlying sales growth of 4.3% in 2025, with Personal Care growing 4.7%. 

Free cash flow hit €5.9bn in 2025 at 100% conversion, comfortably covering €4.3bn in dividends. The cash proceeds will also fund €6bn of share buybacks through to 2029.

The dividend yield is close to a 10-year high, but I don’t think it’s a high-yield trap built on deteriorating cash flows. It’s a quality business that’s temporarily out of fashion.

Income investing

Earning a second income through the stock market takes two things. One is cash up front and the other is stocks that can turn that into real returns. The first part is getting harder and harder, especially for workers on the National Living Wage. But for anyone who can find cash to put aside, I think Unilever’s worth a look.

Mechanically, 3,566 shares generate £1,443 in annual dividends. Income investors, in my view, could do a lot worse than considering this one.

Should you invest £5,000 in Unilever right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Unilever made the list?

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Stephen Wright owns shares in Unilever.

Since June 2021, Rolls-Royce Holdings (LSE:RR.) shares have been the FTSE 100’s star performer. Much of this is due to a strong post-pandemic recovery in its aircraft engines business.

But I suspect there’s also an element that reflects investor optimism about its move into the small modular reactor (SMR) market. Let’s consider how factory-built mini nuclear power plants could affect the group’s share price.

A worldwide opportunity

Last month, Rolls-Royce announced that it had won a contract to build three SMRs in Sweden. Earlier this year, it confirmed that it’s entered into a partnership to deploy 3GW of capacity in the Czech Republic. It’s also exploring other opportunities in Estonia, Hungary, Poland, and Ukraine.

Closer to home, it’s won government backing to introduce the technology to the UK, with a site in Wales earmarked for the first of three SMRs.

Although it’s impossible to accurately forecast these things, Rolls-Royce’s boss reckons there could be 400 SMRs in the world by 2050.

The case for…

Why is there such enthusiasm for these mini power plants? Although the by-product of nuclear waste casts doubts on their green credentials, other claimed advantages of SMRs include:

• They should be cheaper and quicker to build due to their modular design, and their quality should be assured.
• The smaller size of the components makes them easier to transport and install.
• The plants can be deployed more easily in countries with less sophisticated power networks.

Some of the demand for SMRs could come from the anticipated growth in data centres. Barclays Research reckons they could require 560 TWh of electricity by 2030. For context, that’s roughly what South Korea, a country with a population of just over 50m, currently consumes each year.

Citi values the total addressable market for SMRs at £45bn in today’s money. If the group can achieve 25%-50% of this, it reckons it’s worth 80p-160p a share.

The case against…

Personally, I believe a 50% market share is a little optimistic.

The World Nuclear Association has identified 41 companies working on SMR projects. It also lists seven different cooling methods. Will Rolls-Royce’s version succeed? To be honest, I don’t know, although the group’s reputation for engineering excellence makes it, in my opinion, one of the most likely to successfully bring the technology to market.

However, at the moment, it’s believed that only Russia and China have SMRs that are working. But these are small and it’s unclear whether they are commercially viable.

It’s also impossible to tell how much of the SMR potential has already been factored in to the Rolls-Royce share price.

My view

However, the group has other revenue streams.

And in my opinion, all of these are well positoned to grow over the next decade or so. Air passenger numbers and cargo volumes are going up, which will increase the number of flying hours of its engines. Its defence business is winning new orders on the back of increased global instability, and data centres are increasing the demand for the group’s emergency and off-grid energy solutions.

As a minimum, SMRs could be the icing on the cake. In a best-case scenario, they could open up another huge revenue stream, which can only help the group’s share price.

For these reasons, I believe Rolls-Royce is a stock to consider.

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Rolls-Royce Plc made the list?

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James Beard owns shares in Rolls-Royce Holdings plc and Barclays plc.

Regional REIT (LSE: RGL) is the sort of stock that makes passive income investors sit up. The dividend yield is 8.74%, which is huge by today’s standards.

The promise of cash returns is right there in the numbers. Whether it’s a promise the company can keep is another matter.

What it owns

Regional REIT owns 112 properties across the UK. These are predominantly offices outside the M25 where parking is abundant and appetite for the London commute is not.

It consists of 1,146m units, with 659 occupants. That’s an encouraging sign – it means the firm doesn’t rely extensively on any one tenant.

That, however, is where the positive signs end. Occupancy rates were 75.9% at the end of the company’s financial year.

Real estate investment trusts (REITs) don’t pay tax on their income. But that only applies when properties are occupied – vacant buildings don’t generate rent.

There’s another risk to pay attention to as well. A net loan-to-value ratio of 40.4% means Regional REIT carries meaningful debt.

With high dividend yields, it’s always worth asking what the risks are. But it’s also important to focus on what the company can do – or is doing – to mitigate them.

Strategy

There are two issues with Regional REIT – empty properties and elevated debt levels. In both cases, however, the firm has a strategy for killing two birds with one stone.

It involves selling the vacant buildings and using the proceeds to reduce debt. Last year, the company completed £51.6m of disposals at 1.3% above book value. 

Interestingly, the stock is currently 50% discount to its book value. So it’s selling its weakest properties at higher multiples than the market values its average ones at.

New lettings secured on the remaining properties were 3.9% ahead of expectations. That’s a sign the occupied bit of the portfolio is actually pretty good.

The remaining debt is fully fixed and hedged at an average cost of just 3.4%. That isn’t particularly expensive and near-term maturity risk has been largely dealt with.

So management has a plan to solve one problem with another and it appears to be working. But there’s still a big dividend yield on offer for investors willing to buy the stock.

Dividend yield

With the stock at 92p, Regional REIT’s 2026 dividend target of 8p implies a yield of roughly 8.74%.

That reflects some acknowledgement of genuine risk. And the dividend has been cut recently, which should remind investors of this. 

Mechanically, however, £13,729 buys approximately 15,000 shares — enough for £100 per month in dividends, if the target holds. And there aren’t too many opportunities like this. 

That is, of course, assuming those shares are held in a Stocks and Shares ISA. If they aren’t, dividend tax makes things a bit more complicated.

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Of course, the word ‘if’ can’t be eliminated entirely. And Regional REIT is one of the less straightforward businesses in the industry.

There are no free lunches at yields approaching 9%. But the balance sheet has improved, the disposal programme is working, and the 2025 dividend was fully covered. 

Given all this, I think the stock is worth considering as part of a broader diversified income portfolio.

Should you invest £5,000 in Regional REIT right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Regional REIT made the list?

---

Stephen Wright does not own shares in any of the companies mentioned.

What’s better than a high-yielding income stock? One that also happens to be dirt cheap. FTSE 100 housebuilder Persimmon‘s (LS: PSN) both. So is it worth considering today?

If you know anything about housebuilding sector, you’ll know it’s had a terrible decade. The seeds of negativity were set after the financial crisis, when interest rates were slashed almost to zero and held there for years. That drove house prices to unaffordable levels, squeezing many first-time buyers out of the market.

Housebuilders were then on the frontline of a string of shocks, starting with Brexit in 2016. The post-pandemic inflationary crisis, which sent mortgage rates to the skies, and the scrapping of the Help to Buy scheme in 2023 further squeezed young buyers.

Why has this share done so badly?

As if that wasn’t enough, hikes to Employer’s National Insurance and the Minimum Wage drove up labour costs, and the post-Grenfell cladding forced builders to shell out hundreds of millions in fire safety measures.

There was a brief respite as the Covid ‘race for space’ and stamp duty cuts briefly fired up house prices. The Persimmon share price peaked at 3,160p in May 2021. Today, it’s around 1,134p. That’s a peak-to-trough drop of almost 65%. It may also be a buying opportunity.

Plenty of investors will baulk at buying such a troubled stock. They’re wise to be cautious. While it’s great to buy cheap shares, the recovery can take a lot longer than you might like. Persimmon, like the rest of the housebuilding sector, has been swimming against the tide for years.

I topped up my stake in FTSE 250 housebuilder Taylor Wimpey at the start of this year, because I expected the property market to go gangbusters as interest and mortgage rates continued to fall. The Iran war wrecked that. But there are signs that some kind of Middle East peace deal may hold, and oil supplies are getting through. The International Energy Agency has even talked of a glut in a year or two. Inflation could finally fall below 2% next year. A word of warning: I thought the same in January. Didn’t happen.

Is Persimmon still making money?

But I still think there’s an opportunity here for investors willing to accept some volatility. Despite its share price struggles, Persimmon remains a profitable company. Last year, pre-tax profits actually rose 13% to almost £446m, beating expectations of £440m.

That followed a couple of torrid years though:

• 2025 – £445.6m
• 2024 – £395.1m
• 2023 – £351.8m
• 2022 – £703.7m
• 2021 – £973.0m

Building houses in the UK isn’t easy, given planning restrictions, and despite government promises doesn’t look like getting any easier. The economy’s struggling, the cost-of-living crisis is far from over, and buyers are strapped for cash.

But with a forward price-to-earnings ratio of 11.1, and forecast yield of 5.51% for 2026, Persimmon’s starting to look exciting. I think it’s worth considering, for long-sighted investors who are up for the challenge.

Should you invest £5,000 in Persimmon Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Persimmon Plc made the list?

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Harvey Jones owns shares in Taylor Wimpey.

Working towards passive income in the stock market takes time, and I don’t think anyone should start by chasing the highest yield. For me, the better thing to focus on is whether a company can keep paying and growing dividends for decades.

That’s why I like businesses that have been rewarding shareholders since my father was young, not just stocks that look tempting today. If I’m thinking 20-30 years ahead, I want durability, not drama.

So which UK dividend stocks look strongest as we move into the second half of 2026?

10 income stocks that complement

For me, the best dividend stocks have three things in common: they throw off enough cash to cover payouts, they have long records of paying shareholders, and they carry debt levels that don’t threaten the dividend.

I also like businesses with pricing power, because that helps them protect margins when inflation or weak demand hits. That’s why I’d rather own a steady 4%-yielder like Diageo (LSE: DGE) with a strong record, than chase an 8% yield that could disappear next year.

Stock	Why it stands out	Income profile
Diageo	Global brands and a 42-year dividend record	4% yield, recovery dependent
Unilever	Defensive consumer staples with long-running payouts	Moderate yield, steady
RELX	Recurring revenue from information services	Lower yield, very dependable
Halma	45 consecutive years of dividend growth	Lower yield, strong growth
Bunzl	Defensive distributor with long dividend discipline	Moderate yield, resilient
National Grid	Regulated cash flows support income visibility	Higher yield, slower growth
UnitedUtilities	Regulated water business and predictable earnings	Higher yield, defensive
Severn Trent	Similar regulated model and long-term income appeal	Higher yield, defensive
Shell	Huge cash generation, but commodity risk is real	Higher yield, cyclical
HSBC	Large payout potential, though earnings are cyclical	Higher yield, more volatile

My top pick today

Diageo looks especially interesting for both income and value investors this year. The alcoholic beverages producer owns and markets several ‘billion-dollar’ globally recognised brands worldwide.

In recent results, management said the group’s “broad portfolio of iconic brands” with sales in “nearly 180 countries”. That gives it the scale and reach many income investors want. Despite a 50% price decline in the past five years, profitability remains solid, with a return on equity (ROE) of 21.39%.

It has a moderate 4.09% dividend yield with a high payout ratio around 80%, but the key attraction is its 47-year payment track record. That shows strong dedication to rewarding shareholders.

Still, it’s faced notable challenges lately and its price fall has reflected them. The latest results showed pressure on sales in North America and China, and it may have to reduce dividends to strengthen the balance sheet (net debt is $21.7bn). 

So it may not be a perfect income stock, but if the price recovers, total returns from both dividends and capital gains could be significant.

The bottom line

Diversification goes beyond just including stocks from different sectors. Even within a pure income portfolio, it’s important to include a variety of dividend stocks with complementary characteristics.

Each of the dividend stocks I covered here could all add value to an income portfolio in various ways. A portfolio filled only with high yielders can look attractive until one or two companies cut payouts, so it often makes sense to consider including stronger, more established businesses like Diageo. 

That kind of balance is usually what helps income remain steady through rough market cycles.

Should you invest £5,000 in Diageo Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Diageo Plc made the list?

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Mark Hartley owns shares in Diageo, Unilever, RELX, National Grid and HSBC.

Penny stocks sit at the sharp end of the risk/reward spectrum. They’re often small, fast‑moving businesses with limited track records, which makes it tough to look confidently 10 years ahead.

But a few names are already reasonably established and still trade at what I’d see as ‘early‑stage’ valuations. One example is Michelmersh Brick Holdings (LSE: MBH).

So what makes it an interesting long‑term candidate?

A good old solid bricky

Michelmersh manufactures clay bricks and prefabricated components for construction, selling under brands such as Blockleys and Freshfield Lane.

In its 2025 results, revenue came in at £68.9m, down slightly from £70.1m, while statutory profit before tax fell to £4.3m and basic earnings per share to 4.02p.

Despite the profit squeeze, the dividend was held at 4.6p per share and operating cash flow rose to £10.9m. That’s rare for a penny stock.

The share price has struggled to recover since the 2008 financial crisis but now could be its time to shine.

The housing push

With Labour targeting 1.5m new homes, housing policy has moved centre stage again. The manifesto talks about mandatory housing targets and the “biggest increase in social and affordable housebuilding in a generation”. That should support demand for materials if those ambitions translate into actual projects.

Using a discounted cash flow (DCF) model, analysts estimate the stock is trading at 39.3% below fair value. Even one of the lowest 12-month targets I found (88p) is still 11.4% higher than today’s price.

The stock’s 2021 high is double today’s price. If it regains that level and continues for another five years, it could realistically triple today’s price.

But construction activity remains weak and Michelmersh’s margins are already under pressure. Net cash has swung to net debt, and management has flagged uncertainty around the timing of customer orders. If Labour’s housing plans don’t materialise, returns could lag expectations and stall the company’s recovery.

Another strong option?

Brave Bison Group (LSE: BBSN) isn’t technically a penny stock any more, as its market cap now sits a little above £100m. Even so, I see it as a small‑cap play with long-term potential.

The company is a “next‑generation marketing and technology partner”, running social‑media campaigns, influencer marketing, e‑commerce services, and its own media network across platforms like YouTube and TikTok.

For 2025, Brave Bison guided net revenue of at least £33.5m, up 57% from £21.3m in 2024, with adjusted EBITDA of at least £6.5m and adjusted profit before tax of at least £5.5m.

That growth is being driven by acquisitions and new client wins, including major names such as Primark and Royal Mail.

But with lots of recent acquisitions, execution mis‑steps or a downturn in digital ad spend could easily hit margins.

Final thoughts

For me, penny‑style stocks are classic high‑risk/high‑reward tools in a diversified portfolio. Many of today’s giants once traded for pennies, but plenty of penny names quietly disappear too.

Businesses like Michelmersh Brick and Brave Bison offer real‑world demand drivers with credible growth plans. Still, the extra uncertainty means they should only be considered as small positions alongside more defensive core holdings.

The real question is whether that mix of risk and potential suits your own long‑term plan. Investing is all about each individual’s unique goals, timeline, and risk tolerance.

Should you invest £5,000 in Michelmersh Brick Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Michelmersh Brick Plc made the list?

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Mark Hartley does not hold any positions in the companies mentioned.

Investors have been dazzled by Rolls-Royce (LSE: RR) shares ever since they took off after the pandemic. That’s hardly surprising, with the stock up an astonishing 1,220% in five years. That would have turned a £10,000 investment into a staggering £132,000.

That’s wonderful for investors who got in early but a problem for latecomers. Have they left it too late?

The answer is brutal and obvious. Yes. Rolls-Royce is now worth £110bn, and simply can’t keep growing at the same breakneck pace. Attention has drifted away, while US tech stocks have swung back into favour.

Is SpaceX just more exciting?

Much of that was driven by another potential high-growth opportunity, Elon Musk’s Space Exploration Technologies Corporation, or SpaceX (NASDAQ: SPCX). It’s dominated headlines either side of its record-breaking IPO on 12 June.

The share price was set at $135 but quickly rocketed past $200. As many writers on The Twelfth Magpie warned, the shares probably overshot on all the hype. And so it proved. The SpaceX share price fell 13% last week, although it’s still above its launch price at around $153.

Will it fall further? Maybe not. A wall of money is still waiting to go into SpaceX from passive exchange traded funds.

Personally, I think investors should approach with caution today. SpaceX is pouring money into its artificial intelligence arm xAI and posted a $4bn loss in the first quarter of 2206. Is AI a bubble or a generational opportunity? Right now, we just don’t know.

Rolls-Royce was riding high earlier this year when its price-to-earnings (P/E) ratio hit a dizzying 65. I was urging caution then too.

The shares slumped almost 20% in March, as the Iran war threatened international travel, especially in the Middle East. That was bad news because aircraft engines still generate around half of group revenues. Its Defence arm should have benefited, but that sector has also cooled after a strong run.

While SpaceX has streaked across the investment firmament, the Rolls-Royce share price has clicked back into gear. It’s up 22% in the last three months. The P/E has retreated to 46, but that’s still expensive. This is a company that has repeatedly set ambitious targets under CEO Tufan Erginbilgic, and usually matched or smashed them. It’s on course to post profits of up to £4.2bn this year.

So what do the experts say?

Consensus analyst forecasts put Rolls-Royce on a one-year share price target of 1,438p. If correct, that’s modest growth of 2.5% from today’s 1,406p. However, 16 out of 20 analysts still label it a Strong Buy, with not a single Sell recommendation.

By contrast, SpaceX forecasts look far more exciting, with a target price of 242.5p. If correct, that’s growth of 58% from today’s 153p. Five out of 11 brokers name it a Strong Buy. Two say Sell.

Forecasts aren’t guaranteed. Some SpaceX predictions may reflect the excitement around the IPO, while Rolls-Royce targets may need updating after its latest rise.

My view? Both are stunning companies but investors considering them should approach with caution. There’s just a little too much hype and hope baked in

Should you invest £5,000 in Rolls-Royce Plc right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Rolls-Royce Plc made the list?

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Harvey Jones owns shares in Rolls-Royce Holdings and the Scottish Mortgage Investment Trust.

Warren Buffett is a once-in-a-generation investor. But there’s another company that I’ve been looking at that has a lot in common with his investment vehicle Berkshire Hathaway (NYSE:BRK.B).

The stock is Danaher (NYSE:DHR). It operates in very different industries, but a closer look reveals some deep similarities.

From mortgages to microscopes

Berkshire Hathaway began life as a struggling New England textile mill. It was bought by Buffett, who turned it into one of the greatest conglomerates of all time.

Danaher’s journey is a similar one. It began life as a Massachusetts real estate investment trust (REIT), before being bought by Mitch and Steve Rales in 1984.

Since then, the company’s been on an acquisition journey. It started with manufacturing, then shifted into instruments and, most recently, life sciences and diagnostics.

The crossover however, goes beyond origin stories. In 1985, the Rales brothers made a bid for Scott Fetzer Company – and lost out… to Berkshire Hathaway.

Disciples of the same religion

Nowadays, both companies are serial acquirers with decentralised business models. Neither can be accused of wasting money on office sofas or unnecessary support staff.

There are however, some meaningful differences. Beyond the industries they operate in, they have contrasting acquisition styles.

Buffett’s approach was to buy businesses and leave them alone. Danaher implements its own principles – the Danaher Business System – and looks to improve its subsidiaries.

Interestingly, I think this might be the direction Berkshire’s heading in. Chief exec Greg Abel’s known for being much more involved than Buffett, so change might be on the way.

Acquisitions

Acquisitions are a key part of Danaher’s growth story. But they inevitably bring risks, whether that’s overpaying or challenges with integration.

Last year, the firm recorded its largest asset impairment in over 20 years. This was the result of a $9.6bn deal to buy Aldevron during the 2021 mRNA euphoria.

Including Buffett, even the best investors have deals that don’t work. What separates the great from the good is what they do next. Danaher’s been disciplined in divesting businesses that don’t perform as anticipated. So in some ways, the write-down is a sign of a strong culture, not just a mistake.

What do the numbers say?

Danaher shares are unusually cheap right now. At a price-to-book (P/B) ratio of 2.5, the stock’s close to a 10-year low. 

A big reason for that is the decline in demand for bioprocessing equipment after the end of the pandemic. But signs of a recovery are on the way.

As they say in sports, form is temporary but class is permanent. And Danaher’s long-term strengths – its culture and strategy – seem firmly intact to me.

This is why I’ve had the company on my watchlist for some time. But is it finally time for me to make a move and buy the stock?

The next Berkshire Hathaway?

Berkshire Hathaway’s the largest single investment I own. And I don’t expect that to change any time soon.  I am however, always mindful of portfolio diversification. So the opportunity to add another company that shares a lot of Berkshire’s key strengths is an attractive one.

My price target for Danaher is around $163 – a 2.2 price-to-book multiple, in line with the 10-year lows. At that price, I’ll be looking to buy in July.

Should you invest £5,000 in Berkshire Hathaway right now?

When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie 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 Berkshire Hathaway made the list?

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Stephen Wright owns shares in Berkshire Hathaway.