The UK stocks that would have made an ISA millionaire

by | Feb 29, 2024

  • 46 London-listed stocks would have created ISA millionaires since 1999, based on investing the full ISA allowance each year
  • Ashtead was the biggest success for investors following this strategy, with an investment now worth £17.1 million
  • Proof that investors can make decent money from investing in the UK stock market
  • How did some of the most popular stocks fare?
  • For an in-depth look at the funds and investments trusts that would have made ISA millionaires, follow this link

Dan Coatsworth, investment analyst at AJ Bell, says:

“Think the UK stock market is a graveyard for equities? Think again, as 46 London-listed stocks would have made investors a millionaire had they used their full ISA allowance at the start of each tax year since the tax wrapper was launched in 1999*. This is proof that the UK is still a vibrant place for investors to make money and shows how the ISA has proved to be a fantastic way of sheltering wealth creation from the taxman.

“AJ Bell has looked at the total returns an investor would have made if they bought the same stock at the start of each tax year and reinvested all dividends. The analysis period runs until 14 February 2024 and each stock must have been on the UK market since April 1999 or earlier.

“Investors were allowed to contribute £7,000 a year from the creation of the ISA in 1999 until 2008 when the allowance started to go up. By 2017 the allowance had hit £20,000 and it remains at that level today.

“FTSE 100 member Ashtead is the standout stock for investors who followed the ‘maximum ISA’ strategy every year since 1999. By Valentine’s Day 2024, the investment would have been worth £17.1 million.

“In contrast, using your full ISA allowance each year would have delivered £835,566 if invested in a global tracker fund** or £585,432 if invested in a UK tracker fund***.”

Top 10 “ISA millionaire” UK stocksLatest ISA value
Games Workshop£8,893,228
JD Sports Fashion£6,657,590
IMPAX Asset Management£5,578,214
Hill & Smith£3,456,918

Sources: AJ Bell, SharePad, HMRC, total return data to 14 February 2023.

*AJ Bell analysis based on data from SharePad. Assumes an individual invested their maximum annual ISA allowance in a single company stock each year at the start of the new tax year and reinvested the dividends. The analysis excludes any companies with a market capitalisation below £500 million. Values are up to 14 February 2024. Based on this analysis, 46 UK shares would have generated an ISA worth £1 million or more.

**Based on performance of Scottish Widows International Equity Tracker and ***L&G UK Index.

The secret of Ashtead’s success

“Ashtead hires out an array of construction equipment spanning aerial platforms and forklifts to pumps, generators and fuel tanks. It has benefited from a structural market shift whereby an increasing number of companies rent rather than own equipment. Ashtead has used the opportunity to open more rental depots and expand its geographic reach across the US, its primary territory. The more money it makes, the more it reinvests in further depots and equipment.

“It has also helped that major infrastructure and housing investments have taken place over the past 25 years, creating another demand tailwind. Ashtead has paid out a considerable amount of cash as dividends over the years and investors who reinvested this money experienced the beauty of compounding, and that has turbocharged their wealth.

“What’s interesting about Ashtead and many other winning names on our list is that gains weren’t achieved every single year. There were plenty of calendar years where investors would have seen a decline in the value of their investment. This highlights the importance of being patient with investing and sticking with a company through good and bad times if you believe it has the right business model and characteristics to prosper over the long term.”

Games Workshop and Diploma have the Midas touch

“Games Workshop’s typical customer base may not be particularly broad but they spend big on miniature figures and board games, which translates into a nice little earner for the company. Investors who recognised the power of this market niche have filled their pockets with more riches than a pirate’s treasure chest.

“Diploma’s high ranking in the ISA millionaire table is proof that boring can be beautiful. It supplies essential items needed to run businesses, ranging from seals and gaskets for factories, wires and cabling for aerospace and defence markets, and instrumentation for hospitals. These are non-discretionary items which means Diploma is seen as a vital partner for a wide range of businesses and its success has translated into stellar share price gains.”

JD Sports and Jet2 join the millionaire’s club

“Other stocks that have turned investors into millionaires if they had contributed the full ISA allowance each year since 1999 include JD Sports, which has become a major force on UK high streets and overseas thanks to the boom in demand for expensive trainers and snazzy tracksuits.

“Jet2 has also shown it is possible to build a successful airline and packaged holidays business despite cut-throat competition.”

How did some of the most popular stocks fare?

“Many people own shares in the banking sector for generous dividends and that explains why Lloyds is one of the most popular stocks among UK retail investors. While it may offer a reasonable source of income, it’s always important to consider an investment based on the total return which includes the value of your capital.

“For example, there isn’t merit in owning a stock that pays a good yield but whose share price falls by a greater amount, as you would be losing money.

“Someone following the ISA millionaire strategy and investing their full allowance every year since April 1999 in Lloyds would now have an investment worth £252,750 if all dividends were reinvested. That sounds impressive until you consider that the investor would have contributed £303,440 to their ISA over this period.

“BT is another disappointment as someone following the same ISA strategy would now be sitting on an investment worth £240,253, representing a loss of more than 20%.”

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