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

Despite the economic downturn there are still many top UK shares for investors to buy. This cheap dividend and growth stock is one I’m looking at today.

| More on:

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.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

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.

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.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

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.

More on Live: Coronavirus Market Crash Coverage

Young mixed-race woman jumping for joy in a park with confetti falling around her
Investing Articles

2 FTSE 250 stocks (including a 7.1% yield!) I’d love to buy in September!

The FTSE 250 is home to some of London's best value stocks to buy. Here are two I'll be looking…

Read more »

Investing Articles

Is a stock market crash coming? Here’s what I’m doing now!

UK share prices are collapsing again as concerns over the global economy rise. This is what I'll be doing if…

Read more »

Stack of British pound coins falling on list of share prices
Investing Articles

Is the ITM Power share price too cheap to miss?

The ITM Power share price has taken a battering as fears over its widening losses grow. Does this represent a…

Read more »

Investing Articles

2 of the best cheap FTSE 100 shares to buy for 2022!

I'm searching for the best FTSE 100 shares to load up on for the new year. I think these blue-chip…

Read more »

A couple hug having moved into their new home
Live: Coronavirus Market Crash Coverage

Revealed! How first-time buyers receive £30k towards buying a home

According to new research, first-time buyers are beating record house prices by accessing an average of £30k from a particular…

Read more »

Investing Articles

4 penny shares to buy if stock markets crash in December!

I'm searching for the best cheap UK shares as stock markets threaten to crash again. Here are four top penny…

Read more »

Investing Articles

A dirt-cheap FTSE 250 dividend stock I’d buy today

I'm hunting for the best income stocks to buy for my Stocks and Shares ISA. Here's a top-class FTSE 250…

Read more »

Investing Articles

A dirt-cheap UK growth share I’d buy for November!

Investor demand for this UK growth share has cooled in recent weeks. Here's why I think this could prove to…

Read more »