As a turbulent 2020 draws to a close, it’s time to consider which UK shares to buy for next year.
It’s hoped that recent developments on a Covid-19 vaccine will help the global economy rebound strongly. But even if the coronavirus crisis drags into 2021 — and economic conditions don’t improve significantly over the next 12 months — there are still plenty of top-quality UK shares that should thrive in the short-to-medium term.
An added bonus is that a great many five-star stocks trade at rock-bottom prices following the 2020 stock market crash. This provides an opportunity for investors to supercharge their long-term returns by buying low today and selling at a much meatier price later on.
Cheap UK shares with BIG dividends
Here are a few top-class UK shares I’m thinking of adding to my Stocks and Shares ISA today. They’re dirt cheap and they’re expected to continue paying fatty dividends to their shareholders as well:
- Sabre Insurance Group is a terrific selection for 2021. The car insurance colossus trades on an undemanding price-to-earnings (P/E) ratio of 14 times for 2021 right now. And this UK share’s forward-looking 6% dividend yield blows the market average out of the water too. Car insurers like this aren’t at the mercy of the economic cycle as their products are legally required by drivers. But this isn’t the only reason why Sabre Insurance is a great buy for next year. I’m also encouraged by signs that gross written premiums have picked up at the business in recent months.
6.7% dividend yields!
- Getting exposure to the e-commerce market is another sound idea as online sales in the UK balloon. One great way for investors to do this is by buying shares in Urban Logistics REIT. This UK share provides logistics facilities that allow businesses to get their goods straight to their customers. And it remains active on the acquisition front to bolster profits growth in the coming years. Expectations that earnings will surge 36% in the upcoming financial year (to March 2022) leaves it trading on a corresponding P/E ratio of just 14 times. And this bodes well for dividend investors as well. Under real estate investment trust rules, Urban Logistics is expected to pay nine-tenths of yearly profits to its shareholders in the form of dividends. As a consequence, this UK share carries a monster 6.7% dividend yield for fiscal 2022.
- GlaxoSmithKline also offers plenty of all-round value at today’s prices. As well as trading on an earnings multiple of 12 times for 2021, the FTSE 100 pharmaceuticals colossus carries a mighty 5.9% dividend yield. Not only does the essential nature of its products make this a brilliant UK share for these uncertain times. But I expect profits at Glaxo to steadily rise over the long term as global healthcare investment climbs and its packed development pipeline delivers the next generation of blockbuster drugs.
