I’m looking at the 2020 stock market crash as an opportunity to build a five-star portfolio at little cost. It’s also a terrific chance to a brilliant return as an income investor. This is because yields from many dividend-paying UK shares have rocketed through the roof.
4 cheap UK shares on my radar
Make no mistake: UK share markets are chock-full of bargains right now. Here are four dividend heroes I’m thinking of adding to my own Stocks and Shares ISA:
- Persimmon, whose shares have fallen 5% in value in 2020, provides oodles for bargain hunters to sink their teeth into today. The FTSE 100 housebuilder not only changes hands on a low forward price-to-earnings (P/E) ratio of 12 times it sports a mighty dividend yield just shy of 5% as well. The UK’s colossal homes shortage means that Persimmon can expect its newbuilds to keep selling like hotcakes long into the future. And the builder is investing heavily to capitalise on these strong market conditions. House production rose 14% year on year in the first half of 2020.
- It’s not just stocks that have tanked in value that look too cheap to miss, of course. There’s plenty of UK shares whose prices have rocketed and yet still trade on dirt-cheap price-to-earnings ratios. Take Caledonia Mining Corporation as an example. The gold digger has surged 130% in value in 2020 as bullion values have rocketed to record highs. Yet Caledonia Mining trades on an forward-looking earnings multiple of just 8 times, a reading that fails to reflect the bright outlook for gold prices. A dividend yield close to 2% isn’t as exciting as that of Persimmon. But that low P/E reading means I’m paying close attention.
Should you invest £1,000 in Legal & General right now?
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- I’d argue that Sylvania Platinum Limited is another irresistible UK share to buy today. Like gold, platinum group metals (or PGMs) have enjoyed a solid price uplift in 2020 on strong safe-haven buying. And persistent macroeconomic uncertainty and low interest rates should keep investment demand quite healthy too. But this is not the only reason why Sylvania’s a brilliant buy today. I’d buy it to ride the inevitable economic recovery, too, a period when industrial demand should rocket. Today the business trades on a low forward P/E ratio of 4 times and boasts a 13% dividend yield. Despite its rising share price in 2020, I think it remains too cheap to miss.
- I’m also paying close attention to PayPoint today. This UK share has plummeted 49% in price in 2020 as Covid-19 has hit its operations and bill payments through its terminals have fallen. But the long-term outlook for this technology stock – which makes retail services terminals for convenience stores – remains compelling. Adoption of its industry-leading PayPoint One terminal remains strong and should deliver stunning profits growth during this decade. Currently PayPoint trades on a forward P/E ratio of just 12 times and carries a meaty 6% corresponding dividend yield.
