Should we all be preparing ourselves for another stock market crash? UK share prices may have stabilised following the shocking falls at the start of the week. But the size of some of the price declines suggest investor confidence is dropping like a stone.
The FTSE 100 posted its biggest one-day fall since June on Monday. It’s reclaimed ground since then, but remains a whisker away from troughs not seen since the beginning of 2020. It won’t take much for another stock market crash to kick off. And, with Covid-19 infection rates rising and lockdowns re-emerging, we may not have to wait long.
Don’t panic! UK shares can still make you rich
This doesn’t mean UK share investors need to run for the hills though. There are plenty of quality stocks that should remain robust in the event of a painful and prolonged economic downturn. Some might even thrive in the current landscape. Even if they fall in the event of another sudden crash I’d expect them to come roaring back before long.
2020 has proven to be a disastrous year for dividend investors as hundreds of UK shares have axed, postponed, or reduced shareholder payouts. However, there are plenty that should continue to shell out enormous dividends to their stakeholders.
Should you buy these 5% dividend yields?
There are stacks of UK shares like these I’d buy, even given the threat of a second stock market crash. I’d buy them at low cost in order to watch them soar in value as confidence steadily returns to the market. Here are a few stocks whose big yields have caught my attention. But should you and I buy them as the Covid-19 saga rolls on?
- Centamin is the perfect pick for these uncertain macroeconomic and geopolitical times. Bullion prices have rocketed 25% in 2020 and are likely to resume their upward path following recent weakness too. You and I can play this theme by buying shares in FTSE 250-quoted Centamin. And we can get a 5% dividend yield in the process.
- I wouldn’t think about buying Royal Dutch Shell though. This is even though the dividend yield for this UK share sits at a colossal 5.5%. It’s not just that the Covid-19 crisis threatens to smash oil demand in the short-to-medium term. It’s that the soaring popularity of ‘greener’ energy sources casts a huge shadow over Shell in the long run too. This FTSE 100 share carries far too much risk for my liking.
- Indeed, I’d rather buy shares in Greencoat Renewables. The dividend yield here sits at a gigantic 5.2% for 2020. And I think it’s in better shape to deliver long-term profits growth than Shell. I’m also encouraged by recent steps the AIM business has made to expand into Continental Europe from its traditional Irish base of operations to turbocharge earnings.
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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.