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As Sirius Minerals prepares to move to the main market, is it time to SXX up the ISA?

Is it time for BT, Lloyds and Vodafone to move over and make room in the ISA for Sirius Minerals?

Fertiliser
Site preparation earthworks are slated to get underway in the second quarter.

The end of the financial year is approaching, which means the financial services industry is bombarding us with reminders to use our ISA allowance.

The Individual Savings Allowance – to give the ISA its full name – has been a resounding success in terms of persuading the man and woman on the Clapham omnibus to do a bit of saving.

They now come in a variety of flavours, including a stocks and shares one.

All of them are what’s known in the trade as “tax wrappers”, which means that any money made from the investment is not subject to tax.

The annual allowance is £15,240 and if you have not used it yet, you’ve got less than a week to do so. Next (fiscal) year it goes up to £20,000, so in theory if you have £35,240 lying about you could spend it all next month using up this year’s and next year’s ISA allowance.

But will you?

Research from Aegon UK indicates that 45% of UK working age adults have no ISA savings for the purpose of retirement.

But should you?

Ah, well, there’s the US$64,000 … er … £20,000 question.

If you’ve got the money, then the answer is probably yes.

The old reliables

According to retail-focused stockbroker The Share Centre, BT Group PLC (LON:BT.A), Lloyds Banking Group PLC (LON:LLOY) and Vodafone Group PLC (LON:VOD) are the three most popular choices to tuck away in the ISA this year.

All sensible if somewhat stodgy choices. The Share Centre says investors are moving from AIM stocks and miners to tried and tested companies with good dividends.

Also moving from AIM, soon, is Sirius Minerals PLC (LON:SXX), the developer of the Woodsmith fertiliser mine in North Yorkshire.

It may not pay a dividend – the mine is not even up and running yet – but it has been touted as a good choice for a stocks and shares ISA, as it is a long-term play.

It’s a £900mln company sitting on a US$15bn asset. That figure rises to US$27bn once the mine is up and running, according to last year’s definitive feasibility study.

The operation has the potential to generate underlying earnings (EBITDA) of US$1-3bn a year, depending on volumes and price.

Let's get Sirius

So, when the mine starts earning there is plenty of potential for dividend income. Tax-free dividend income.

Sure, there is a lot of investment to be done before the mine is up and running, but the company has had little trouble finding backing, largely because the company, under the direction of chief executive Chris Fraser, has done a bang-up job to date.

The switch to the main market, scheduled for late next month, should raise the company’s profile and could prove a catalyst to the next stage of Sirius’s remarkable rise.

Quick facts: Sirius Minerals PLC

Price: 3.478 GBX

LSE:SXX
Market: LSE
Market Cap: £244.13 m
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