The Motley Fool

8.3% dividend yields! 2 UK shares I’d buy in February and hold for 10 years

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

The UK national flag in front of Canary Wharf skyscrapers where professionals trade shares for a living.
Image source: Getty Images

Confidence on UK share markets remains pretty delicate as we move into mid-February. Neither the FTSE 100 nor the FTSE 250 have made any notable progress in the year to date. In fact the Footsie is down since the turn of 2021 as enduring fears over Covid-19 provoke investor jitters.

I consider this to be a wasted opportunity. This is because UK stock markets are packed with quality stocks that should thrive over the long term. And a large number of these are still trading at rock-bottom prices following the 2020 stock market crash.

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic… and with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. And if you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio.

Click here to claim your free copy now!

Careful now!

Of course, investors need to be careful as the public health emergency rolls on. Shareholder returns took an almighty smack last year as hundreds of UK shares cut, postponed or cancelled dividends following the coronavirus outbreak. There could be a repeat in 2021 should Covid-19 continue to spread, creating more profits woe and damaging already-strained balance sheets.

But as a long-term investor myself, I’m continuing to invest in my Stocks and Shares ISA. And I will continue to do so, even if stories about Covid-19 variants cast doubts on the economic recovery. I think there are stacks of quality UK shares with the strength to keep weathering the impact of lockdowns and travel restrictions. Defensive stocks like this include telecoms providers, beverages manufacturers and makers of personal goods. Demand for their goods and services remains fairly constant during economic upturns and downturns.

Hand holding pound notes

2 UK dividend shares on my ISA watchlist

Here are two UK stocks I’m thinking of adding to my Stocks and Shares ISA this month. I think they’re in great shape to keep paying big dividends whatever happens in the fight against Covid-19.

#1: Direct Line Insurance Group. Non-life insurance demand tends to be stable irrespective of broader economic conditions. It’s particularly predictable when it comes to car insurance as having cover on your motor is a legal requirement. There is a risk that further Covid-19 lockdowns could hamper insurance uptake as Britons stay indoors, thus hitting profits at Direct Line. But on the other side, infection fears have increased the number of people picking their cars over using public transport. This will likely continue as long as Covid-19 persists. Today Direct Line carries a meaty 7.5% dividend yield for 2021.

#2: Polymetal International. Gold prices flew to record peaks in 2020 as the emergence of Covid-19 boosted demand for flight-to-safety assets. The successful rollout of vaccines in stemming the crisis might make bullion values backpedal from current levels below those all-time highs. And this would be detrimental for gold producers like Polymetal, naturally. But there are other reasons why I think gold prices could still rise regardless of this scenario. The prospect of a sinking US dollar is one, making it cheaper to buy greenback-denominated gold. So is broad concern over rocketing inflation due to ongoing central bank and government stimulus. These are macroeconomic issues that could continue long past 2021 too. I’d buy UK gold-producing shares like 8.3%-yielding Polymetal to ride this theme.

FREE REPORT: Why this £5 stock could be set to surge

Are you on the lookout for UK growth stocks?

If so, get this FREE no-strings report now.

While it’s available: you'll discover what we think is a top growth stock for the decade ahead.

And the performance of this company really is stunning.

In 2019, it returned £150million to shareholders through buybacks and dividends.

We believe its financial position is about as solid as anything we’ve seen.

  • Since 2016, annual revenues increased 31%
  • In March 2020, one of its senior directors LOADED UP on 25,000 shares – a position worth £90,259
  • Operating cash flow is up 47%. (Even its operating margins are rising every year!)

Quite simply, we believe it’s a fantastic Foolish growth pick.

What’s more, it deserves your attention today.

So please don’t wait another moment.

Get the full details on this £5 stock now – while your report is free.

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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.