7.8% dividend yields! 4 UK shares I think are too cheap to miss

I reckon these top UK shares are brilliant buys for these uncertain times. And at current prices I’m thinking of buying them for my Stocks and Shares ISA.

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Royston Wild

I am a seasoned freelance financial journalist specialising in global stock markets. I was formerly a stocks and commodities reporter -- and editor of print and online FX market coverage -- at Shares Magazine, providing information and analysis for readers to make sound investment decisions in the UK and overseas. I was also a regular contributor to the magazine's extensive catalogue of bookazines and trading guides. Prior to this I was a reporter with the BaseMetals.com and TheBullionDesk.com newswires, breaking the latest news and providing in-depth analyses of the base and precious metals markets.

2 top UK shares for mining fans

Here are a couple of cheap UK shares I’m thinking of adding to my Stocks and Shares ISA today:

Fresnillo’s share price has endured a double whammy in recent weeks. First the Mexican gold and silver miner cut its production forecasts for 2020. Then a rising US dollar and improving risk appetite pushed precious metals prices lower. I fully expect this UK share to rebound sooner rather than later though. There remain plenty of macroeconomic and geopolitical issues that’ll keep demand for safe-haven commodities bubbling along nicely. The possibility of fresh rounds of central bank money printing could drive gold and silver values higher as well. Today FTSE 100 Fresnillo trades on a forward price-to-earnings growth (PEG) ratio of 0.1 for 2021. This sort of value deserves serious attention.

The UK national flag in front of Canary Wharf skyscrapers where professionals trade shares for a living.

The impact of earlier Covid-19-related stoppages means Bushveld Minerals is expected to record losses in 2020. However, the vanadium producer is expected to bounce straight into the black next year, leaving it trading on a forward price-to-earnings (P/E) ratio of just 6 times. Exploding demand for vanadium redox batteries (or VRBs) should drive terrific profits growth at Bushveld during the 2020s. I don’t think this is reflected in this UK share’s valuation right now.

7.8% dividend yields!

The following UK shares also trade on rock-bottom earnings valuations today. But, unlike those I’ve already mentioned, they offer bulky dividend yields as well:

The BAE Systems share price has snapped sharply from the seven-year troughs of 397p hit on October 30. Today, it trades around 475p but I reckon it still offers plenty of value for money. For 2021, this FTSE 100 share trades on a P/E ratio of 9 times and it offers a 5.8% dividend yield. I think it’s a particularly brilliant pick for risk-averse individuals as financials this week showed. It said its order intake expectations are now higher than they were before the Covid-19 crisis struck in early 2020. BAE Systems is clearly a great non-cyclical UK share for these uncertain economic times.
Home, car and travel insurance colossus Direct Line Insurance Group also looks to be a snip at recent prices. This UK share trades on an earnings multiple of just 10 times for 2021. It carries a mighty 7.8% dividend yield as well. Similar to BAE Systems, this defensive stock is also a perfect buy for tough economic periods like these. Customer demand for general insurance products doesn’t tend to suffer during economic downturns, as Direct Line’s latest trading statement showed. Total written premiums were basically unchanged during the third quarter, it said this week, at £851.5m. Such exceptional earnings stability, allied with its formidable cash generation, means it should remain an impressive dividend payer beyond this year and next too.