Step 5 to get a higher ISA return

For many of us, a Stocks and Shares ISA is an important financial tool. Hopefully, it can help us build wealth.

Just as it makes sense to get a car MOT or a personal health check, I think it makes sense to check an investor's ISA from time to time with the aim of trying to maximize returns.

Here are five steps I can take to achieve that.

1. Revisiting investment cases

When buying a stock, consider the investment case. Whether it's put in that language or not, that's what happens when someone buys shares. They measure the reasons to buy (or not).

Investment cases are subject to change. The market may have changed, or the company may have changed its strategy.

Periodically reviewing the investment case for each share you own can alert you to any changes that seem likely to lower the price (or dividend). That can help us make choices as investors that maximize returns.

2. Letting go of unhelpful feelings

Sometimes we can become emotionally attached to a particular assignment. That may be comfort – but not useful – when it comes to increasing the value of an ISA.

By taking a hard-headed, logical approach to what we're holding and why, I hope it's possible to get rid of some investments that have outlived their purpose but still have an emotional pull on us.

3. Looking closely at how dividends are funded

A common mistake investors make is to buy high-yielding stocks only to see their gains reduced or canceled altogether – and the stock price plummets as a result.

Holding stocks that maintain or continue to grow their dividends over the long term will hopefully help me get more out of my ISA than buying unusually high yielding companies, but I've seen them go down a lot.

So as an investor, I pay close attention to what a company's free cash flow is – and what I think might happen to it in the future, based on its business prospects.

4. Reducing fees and commissions

The easiest way to improve my ISA return is to reduce my spending on fees and commissions.

So I think it makes sense for me to consider the different Stocks and Shares ISAs available in the market and choose the one that best suits my needs.

5. Avoiding 'good' companies and looking for good

Most shares can give me a decent return on my ISA – but only a limited number give me a big come back. In advance it can be difficult to know which ones (or if everyone can buy!)

So I look at some aspects. Consider for example my role in it British American cigars (LSE: BATS).

The company ticks a lot of boxes for me. Its market is huge. It has a number of competitive advantages within that market, from global distribution networks to a premium product portfolio.

Its balance sheet may carry a bit of debt, to be fair, but British American is a proven cash generator and very profitable. Indeed, the share yields 8.6% and has raised its yield every year for decades.

Another risk is that the demand for cigarettes, although still high, is decreasing. But British American has been growing its non-tobacco business. I have no plans to sell this high income share!