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6.5% dividend yields! 2 UK dividend shares I’d buy for my ISA

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·3-min read
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2020 proved to be catastrophe for many income-hungry investors. Hundreds of UK dividend shares were forced to cut, cancel, or postpone shareholder payouts in response to the Covid-19 crisis.

It’s hoped that the boost coronavirus vaccines will give to the economic recovery this year will see a huge improvement in dividend levels versus last year’s washout. However, those buying dividend shares for an immediate improvement in their income flows need to be extremely careful.

Some market commentators have sliced back their forecasts for global dividends in 2021 as the world continues to grapple with Covid-19. The emergence of the Indian variant on these shores is particularly troublesome for UK share investors.

2 UK dividend shares on my radar

The outlook for a great many UK shares remains packed with uncertainty. But there are still plenty of rock-solid stocks for investors like me to choose from today. Here are two top dividend shares I think will pay out big in 2021. I’d happily buy them in my Stocks and Shares ISA and hold them for the long haul.

#1: An safe haven in tough times

Our need for electricity remains constant, regardless of whatever economic, political or social trouble is going on in the background. This makes operators in this field like Greencoat UK Wind (LSE: UKW) dependable investments right now. Indeed, this particular FTSE 250 company’s decision to raise dividends last year despite the coronavirus outbreak provides perfect evidence of this.

Hand holding pound notes
Hand holding pound notes

Everyone knows that green energy is increasingly big business. It’s a field which I think will make this UK dividend share — a company that invests in wind farms all across Britain — a great long-term buy.

City analysts think earnings here will rise 16% in 2021. This underpins expectations of another dividend increase and, consequently, a meaty 5.4% dividend yield. Remember though that changes to green energy laws could harm later profits growth.

#2: Another great play on green power

ContourGlobal (LSE: GLO) is another UK dividend share I’m paying close attention to today. For one, its forward dividend yield of 6.5% is even better than Greencoat’s staggering reading. It also offers terrific value from an earnings perspective too. Brokers think earnings here will soar 400%-plus in 2021, resulting in a nominal price-to-earnings growth (PEG) multiple of 0.1.

This FTSE 250 stock builds and operates power stations all over the globe. Not only does this offer the same sort of defensive qualities as Greencoat, it also puts it in a strong position to exploit soaring global energy demand.

Finally, I like the company’s pledge to dedicate all future investment in renewable energy and low-carbon thermal production, as fresh acquisition news announced last week shows. I think it’s a great buy despite the ever-present threat of plant construction problems that could result in huge project delays and unexpected costs.

The post 6.5% dividend yields! 2 UK dividend shares I’d buy for my ISA appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Greencoat UK Wind. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Motley Fool UK 2021

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