2020 has been a difficult year for dividend investors. Hundreds of UK shares have reduced or axed shareholder rewards as the Covid-19 crisis has rolled on. Things are likely to remain difficult during the early part of 2021 too, given the prospect of a bumpy economic recovery.
Share investors clearly need to stay careful before splashing the cash With this in mind, here are two top UK shares I think should pay huge dividends next year, regardless of broader economic conditions.
The perfect UK share for uncertain times?
Civitas Social Housing (LSE: CSH) offers share investors the perfect blend of big dividends and strong and sustained earnings growth. City analysts reckon annual profits here will rise 13% in the financial year ending March 2021. They predict a further 11% bottom-line rise in fiscal 2022 too.
Meanwhile, current dividend projections for this year and next create jumbo 5.2% and 5.3% dividend yields respectively.
The outlook for many UK shares remains uncertain for 2021 as the Covid-19 crisis rolls on. It’s hoped that recent developments on a vaccine will help the global economy rebound strongly next year. But delays in the mass rollout of such a silver bullet would put paid to such hopes.
This is not an issue that Civitas Social Housing investors need to worry about though. It offers accommodation to adults who have specialist care needs. This UK share’s services are constant during all points of the economic cycle. And this particular segment of the property sector is one of the fastest growing in Britain.
Getting rich as e-commerce explodes
Grabbing a slice of the e-commerce segment is also a terrific idea for 2021. One of the shares I bought in my ISA to ride this trend is Tritax Big Box REIT (LSE: BBOX), which owns and lets out ‘big box’ warehousing and logistics facilities to blue-chip retailers, fast-moving consumer goods (FMCG) manufacturers and couriers.
Buying real estate investment trusts (or REITs) is a particularly good idea for income investors. This is because they must distribute at least 90% of annual profits by way of dividends. This means that Tritax Big Box carries a chubby 4.2% dividend yield for 2021.
Time and again I’ve talked about the benefits of getting exposure to the e-commerce sector. City analysts reckon earnings at this particular share will rise 9% in 2021. And it’s no surprise given the rate at which online shopping activity is accelerating. Fresh data from Deloitte illustrates this point perfectly. The auditor reckons that, in the US, some 64% of all festive holiday spending will be made online this year. This compares with 59% in 2019 and 51% five years ago.
It’s a phenomenon that is being witnessed in most parts of the globe. And it’s one that makes Tritax Big Box a UK share I plan to hold through to 2030 and most probably beyond.
Royston Wild owns shares of Tritax Big Box REIT. The Motley Fool UK has recommended Tritax Big Box REIT. 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.