2 UK stocks I’d invest in with a spare £500

Less than a few months before the end of the current tax year. That means I’m thinking about how to invest in stocks and shares ISAs. If I had a spare £500 to invest today, I would happily spend it on the following two UK stocks.

ITV

I already own a broadcasting and media production company ITV (LSE: ITV) in my ISA. I like to use my spare £250 to add more shares to my position.

Over the past 12 months, the stock has lost 24% of its value. But this does not tell the whole story. Last March the company’s announcement of a new digital platform dropped like a lead bomb on the City. But lately the stock has risen sharply, increasing 60% since the end of September.

Even after the increase, it still trades at a price-to-earnings ratio below eight. They have a 5.8% dividend yield to boot. I see that as attractive.

Change times

However, the shift to digital display remains a risk. Developing platforms (which have now been launched, as ITVX) is expensive. Its long-term success remains uncertain, although initial takeaways have shown promise.

Meanwhile, digital competition is likely to lead to a long-term decline in advertising revenue at ITV’s legacy broadcast operations.

Overall, though, I see the firm as doing a good job juggling current and future customer needs. It also has a growing studio and production business due to demand from other broadcasters for original content to broadcast.

City of London Investment Trust

Another name on the UK stock list I would like to add to my ISA City of London Investment Trust (LSE: CTY).

The attraction for me here is that, by buying one, I will gain exposure to a wide variety of UK stocks especially large, multinationals such as British American Tobacco, shell, and Diageo.

According to the manager, the trust “conservative management style that prioritizes sustainable income and long-term capital growth“. A sizable London-listed multinational company’s holdings mean investors can benefit from global opportunities even if their portfolios mainly consist of UK stocks.

Income potential

The approach provides for shareholders. Last week, the Trust paid its annual dividend for the 57th year in a row. The stock returned 4.7%.

However, these stellar records have their drawbacks. Unusually for an investment trust, City of London is trading at a slight premium to net asset value.

There are risks, too. The focus on UK stocks means that changes in the exchange rate can affect the size of the company’s overseas profits when converted into pounds. As a generalist investment belief, if the stock market as a whole performs very well, there is a possibility that it will also have a negative impact on the City of London.

But, on balance, I like the approach and the income potential of the trust. I would be happy to buy it for my ISA.