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Dividends, growth AND value! A top UK share I’d buy for my Stocks and Shares ISA

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It’s clear that global economic conditions will remain challenging for some time yet. It means that UK share investors like me need to take appropriate action if we are to make a decent return on our invested cash.

An unfortunate consequence of economic downturns is the inevitable spike in corporate casualties. British business has been particularly badly hit following the Covid-19 crisis, but it looks like things could get even worse. Latest research from the Office for National Statistics shows that 64% of all companies faced a low-to-severe risk of insolvency in September. Further, around 43% of firms had less than six months’ worth of cash on their books.

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Things threaten to get a lot more perilous for companies as lockdowns are reintroduced to stem rising Covid-19 cases. It’s a regretful set of circumstances. But purely from an investment perspective, these conditions should benefit UK shares like insolvency specialist Begbies Traynor Group (LSE: BEG).

Rising above the gloom

Latest financials in mid-September showed how strongly this FTSE 250 stock is performing following the Covid-19 outbreak. It said that “our business recovery and financial advisory business has delivered good growth” since May. This was a result of solid organic growth and the benefit of recent acquisitions.

Economic Uncertainty Ahead Sign With Stormy Background

The UK share claimed this robust performance was in spite of government support measures creating a “relatively subdued” insolvency market. And it expects insolvency levels to pick up soon as furlough schemes are scaled back.

Another reason I’m excited by Begbies Traynor is because investors can expect more earnings-enhancing M&A activity to come. It remains highly cash generative and its debt-light balance sheet leaves scope for the UK share to add to the handful acquisitions it made in the last fiscal year.

A top all-round UK share

It’s no wonder that City analysts reckon Begbies Traynor’s bottom line will keep improving. They reckon earnings will rise 5% in the financial year ending April 2021 and then spring 32% higher in fiscal 2022.  As a result, the UK share trades on a very attractive forward price-to-earnings (P/E) ratio of just 15 times right now.

A bright profits outlook and terrific cash generation bodes extremely well for dividends over the short-to-medium term too. The number crunchers reckon last year’s 2.8p per share annual payout will rise to 3p in the current period, creating a 3.3% yield. Expectations of a 3.2p per share reward from Begbies Traynor next year nudges the yield to an even better 3.5% too.

2020 has been an extremely challenging year for investors seeking big-paying UK shares. It’s possible that it will remain so as Covid-19 continues to wreak havoc on the global economy. But there are still plenty of top stocks like Begbies Traynor that remain in great shape to pay chubby dividends. It’s why I continue to buy UK shares despite the economic gloom.

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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.

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