2020 has turned out to be a catastrophe for dividend investors. Hundreds of UK shares have cut, axed or suspended their dividends following the Covid-19 outbreak. And the landscape is likely to remain fraught with danger, given the risk of a long and severe economic depression.
But that’s enough of the doom and gloom. It’s clear that you and I need to be extremely careful before buying UK shares today. Still, there are many top-quality dividend stocks that are too good to miss at current prices. UK shares still offer the chance for investors to enjoy handsome income flows, despite the global downturn. And the stock market crash allows us to build these into a five-star portfolio at little cost.
Should you invest £1,000 in British American Tobacco right now?
When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if British American Tobacco made the list?
4 top dividend stocks
I think the following UK shares all look too good to miss on paper. They offer forward dividend yields of 5% and above following the market crash. Here are the ones I’m considering buying for my Stocks and Shares ISA, and one that I’m avoiding like the plague.
- Property investment trust LXI REIT could prove a lucrative pick for income chasers. It has significant exposure to sectors that thrive during economic downturns like discount retail and budget hotels, and defensive segments like healthcare. Providing Britain can avoid another mass Covid-19 lockdown then this UK share’s in great shape to make good on its 5% dividend yield.
- The legal requirement for drivers to have insurance cover makes 5.5%-yielding Admiral Group a brilliant defensive pick for these uncertain times. Investors can also take encouragement from signs that car insurance premiums are holding up. More than half of drivers either saw their premiums rise or stay the same in August, a recent survey showed. Yet car insurance claims are likely to remain at low levels as Britons stay parked up during the ongoing Covid-19 crisis. This clearly bodes well for FTSE 100-quoted Admiral’s profits column.
- I wouldn’t touch FTSE 100 stock Rio Tinto’s shares with a bargepole, though. I don’t care about its 6%+ dividend yields. This UK share is one of the most cyclical out there and demand for its iron ore and other commodities threatens to remain weak. Latest World Steel Association data, for example, showed global steel production sinking 2.5% in July.
- I’d be much happier buying power station operator ContourGlobal and its 5.8% dividend yields. Electricity generators have some of the best earnings visibility out there. And soaring global power consumption should keep demand for this UK share’s services in demand for years to come. The IEA reckons energy demand will grow by 2.1% every year through to 2040.
Get rich with UK shares
This is just a taster of the exceptional UK shares available for dividend investors to buy today. The Motley Fool’s epic library of exclusive reports can help you find even more too. So do some research and get investing today, I say. You could get seriously wealthy and possibly even make a million with British dividend stocks.
