This year’s stock market crash caught many investors by surprise. Unfortunately, as the second wave of coronavirus ripples across Europe, another slump could be on the horizon. However, this time around, we know which companies will be most affected, and which may escape the carnage.
With that in mind, here are two UK shares I’d buy in an ISA before the next market decline.
Stock market crash bargains
One group of businesses that have performed exceptionally well this year are the supermarkets. Retailers like Morrisons (LSE: MRW) were granted essential status early on in the coronavirus crisis. As such, they were allowed to remain open throughout the lockdown.
The company’s latest trading update showed what impact this had on the business. First-half group sales fell by just 1.1%. Food sales jumped 8.7%, but a decline in fuel sales pulled the overall figure lower.
Still, Morrisons has performed better than many UK shares in 2020. That’s why I think the stock could be a great addition to any ISA portfolio. Thanks to its positive first-half performance, City analysts are expecting the group to distribute 8.8p per share in dividends this year. That gives a dividend yield of 5.1% on the current share price.
Some analysts have also speculated the group could pay out a special dividend of 10p. However, this depends on trading in the rest of the year. Even without the special dividend, Morrisons looks attractive as an income investment in the current interest rate environment.
What’s more, the stock continues to trade below the level it began the year. This suggests shares in the retailer could offer a wide margin of safety after this year’s stock market crash.
Another business sector that has performed remarkably well this year is e-commerce. Companies that help facilitate online operations have benefited from this theme.
Tritax Big Box REIT (LSE: BBOX) owns and operates a selection of so-called big box warehouses, which are essential for retailers who want to run web-based operations.
The demand for these real estate assets has jumped in 2020. According to the company’s latest trading update, the overall demand for big box logistic assets hit a record in the first nine months of 2020.
For its part, Tritax is busy building one of the largest and most sustainable logistics buildings in Europe for retailer Amazon. That’s on top of the rest of the company’s extensive property portfolio.
Income from these assets has held up exceptionally well in 2020. Rent collection has been around 99%. That has helped support the company’s dividend yield, which currently stands at approximately 3.9%. Analysts expect the payout to increase by about 6% in 2021, which could leave the stock yielding 4.1%.
Considering the company’s income potential, defensive asset base, and rising demand for its services, I think buying Tritax for income in an ISA ahead of the next stock market crash could be a smart decision.
The post Stock market crash: 2 must-own UK shares I’d buy in an ISA appeared first on The Motley Fool UK.
Rupert Hargreaves owns no share mentioned. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon. The Motley Fool UK has recommended Tritax Big Box REIT and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. 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 2020