What are the bestselling shares of 2023?

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The search for dividend income, big tech and bargain hunting were the most tempting themes for customers of UK investment platforms in 2023, according to lists of the most popular stocks picked this year.

FTSE 100 financial and insurance stocks dominated the top 10 net buy lists of the UK’s biggest investment platforms, with their generous dividends proving attractive to retail investors in an inflationary environment.

With just a few trading days of 2023 remaining, insurer Legal & General ranks as the most purchased share of this year so far among customers of Hargreaves Lansdown, Fidelity and AJ Bell, and rival Aviva is not far behind.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the big insurers offered attractive levels of dividends backed by fairly stable business models. “Higher interest rates are benefiting L&G’s large pension business, and Aviva’s ongoing transformation is reaping rewards,” she said, noting its diversification into wealth management.

L&G was the second most popular share with customers of platform Interactive Investor, with Lloyds Bank — said to be the most widely owned share in the UK — taking the number one spot. Barclays Bank also featured in the top 10 of every platform that provided the FT with data, reflecting how the higher interest rate environment has boosted banks’ prospects.

The FTSE 100’s big five lenders — Barclays, HSBC, Lloyds, NatWest and Standard Chartered — are expected to pay out £11.8bn in dividends this year, which is 15 per cent of the FTSE 100 total. However, analysts expect next year to prove more challenging.

“Dividend estimates from the banking sector continue to drift lower, as worries over a peak in net interest margins and higher loan losses swirl,” said Russ Mould, investment director at AJ Bell.

Other dividend payers to feature prominently in top 10 charts include Phoenix Group, the UK’s largest savings and retirement business. Currently the highest yielding stock in the FTSE 100, it boasts a dividend yield of 11 per cent.

Vodafone and British American Tobacco have both had a difficult year, with corporate setbacks and more smokers stubbing out their habit. Shares in the companies have fallen by more than 20 per cent in the year to date as a result.

Their top 10 status shows investors’ love for a bargain. Mould said this reflected the market’s lack of faith in future growth potential, though there are fears dividends — currently in double digits — could be next for the chop.

“Note that Vodafone has cut its dividend once in its history while BAT has never done so — in fact, the smoking giant can point to a streak of increases in its annual dividend payment that stretches back to 1998,” he added.

Commodity prices came back to earth with a bump in 2023, denting profits at mining company Glencore, but bargain hunters snapping up its shares meant it featured on several lists. Streeter said Glencore’s investments in copper and nickel, which will prove crucial to the energy transition, had piqued investor interest.

Some of the platform-specific anomalies provide an insight into the risk profile and investment strategy of the typical customer.

Freetrade, the app-based trading platform, offers fractions of expensive US shares, making it popular with younger Isa investors. The top 10 most bought stocks by its customers included all of the “Magnificent Seven” — Tesla, Nvidia, Amazon, Alphabet, Apple, Microsoft and Meta — plus FTSE 100 stalwarts Glencore, Legal & General and Barclays.

The US tech giants have delivered investors the biggest returns, with shares in AI specialist Nvidia rising nearly 250 per cent this year. Perennial favourite Tesla, which ranked number two among Hargreaves Lansdown investors, has risen by nearly 140 per cent.

“These astonishing returns make it easy to forget that 2023 saw the collapse of Silicon Valley Bank and the near-demise of many companies in the ecosystem that it helped support,” said Alex Campbell, head of communications at Freetrade.

When Freetrade customers’ picks were ranked on UK shares alone, Rolls-Royce came in at number four. The aero engine maker proved the fifth most popular buy for customers of Interactive Investor.

This time last year, shares in Rolls-Royce were changing hands for less than £1, but have nearly trebled in price under the tenure of new chief executive Tufan Erginbilgic. At annual results last month, he pledged to quadruple profits in the next four years.

“Yes, there’s an awful lot still to do, and he must deliver on promises, but there are plenty of investors still willing to back him, even at these prices,” said Lee Wild, head of equity strategy at Interactive Investor.