I haven’t been put off from investing by the tragic Covid-19 crisis. I’ve continued to buy UK shares for my Stocks and Shares ISA, and plan to keep growing the size of my portfolio in the short-to-medium term.
Hundreds of dividend-paying stocks have had to stop, postpone, or shave dividends in response to the economic downturn. However, a large number of UK shares should continue paying huge rewards to their shareholders despite the economic crisis. And plenty of these stocks are likely to soar in value once the new bull market kicks off too.
3 top UK shares on my watchlist
Here’s a handful of UK shares like this that I’m thinking of adding to my own ISA today. They’ve fallen heavily in value during 2020, and this provides an excellent dip-buying opportunity for long-term investors:
Old Mutual’s a great way for income chasers to play the new bull market. The discretionary nature of life cover demand means that UK shares like this aren’t as resilient as general insurance providers during downturns. But life insurance companies are among the quickest to recover as economic conditions improve. Old Mutual can expect improving wealth growth in its underpenetrated African and Asian emerging markets to light a fire under annual profits beyond the short-to-medium term too. I think this UK share’s 4.4% forward dividend yield makes it a terrific buy today.
Providers of other financial services such as St James’s Place can expect earnings to rise strongly as the economy rebounds. The investment giant is already performing robustly as Britons plough the cash they’ve saved during lockdown into stocks and other assets. This UK share can expect demand for its services to pick up during the eventual bull market too, as investor confidence improves. As well, stronger economic conditions will lead through to individuals having more cash to invest as well. It’s also possible that low interest rates will remain in place long into the new decade, meaning savers will call upon the likes of St James’s Place to help them get a decent return on their money. Finally, this UK share boasts a 4.5% dividend yield for 2020, making it a top income stock right now.
System1 Group hasn’t had the best of things recently as Covid-19 has hit demand for its marketing services. But it hasn’t all been doom and gloom though. Efforts to cut costs has reinforced this UK share’s balance sheet and boosted the cash on its books. Consequently, City brokers expect more chunky dividends in this fiscal year and System 1 boasts a giant 7% yield. I wouldn’t just buy the business for big near-term payouts though. I’d buy it for the early stages of the economic cycle, a period when advertising spending is likely to boom.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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