The global economy faces the sort of challenges it hasn’t had to endure for generations. The ongoing Covid-19 crisis is creating economic woes that could take donkey’s years to solve. It’s no wonder investor appetite for UK shares remains in the doldrums.
Global GDP will tank an eye-watering 4.5% in 2020, according to the Organisation for Economic Co-operation and Development. This will be the biggest year-on year-drop since the Second World War.
A spiking Covid-19 infection rate in recent weeks, combined with more social restrictions across the globe, has started to dash some hopes of a robust economic rebound next year too, mine included.
It’s not a situation that’s dented my buying appetite for UK shares though. There are plenty of strategies that investors can take to reduce the risk in these uncertain economic times. Like choosing stocks with defensive or counter-cyclical operations.
Studies show UK share markets still deliver exceptional average yearly returns (of 8-10%) over the long term. And that’s even when periods of extreme stock price volatility, like we’ve seen in 2020, are counted.
6% dividend yields
So what’s the reason for you and I to stop buying UK shares today? I’d take this argument one step further by declaring it’d be unwise NOT to go stocks shopping right now. There are far too many dirt-cheap, top-quality UK shares to miss out on following the stock market crash of late February and early March.
2020’s been a tough year for dividend investors as companies of all shapes and sizes have cut payouts or pulled them entirely. But there are still plenty of income heroes for investors to choose from today. Here’s a couple I’m thinking of buying for my own Stocks and Shares ISA:
- Carr’s Group has seen its share price dive 30% in just two months. I’d consider that a great dip buying opportunity. Not only does this UK share trade on a forward price-to-earnings (P/E) ratio of 10 times, the farming engineer and agricultural feeds giant carries a dividend yield of 4.3% too. Its relationship to the defensive food sector should protect profits growth in the near term. And its commitment to product investment and acquisitions promises plenty over the long run.
- Target Healthcare REIT is another great pick for even nervous investors. It’s a huge deal in the ultra defensive care home segment. And like Carr’s Group, it’s investing heavily to supercharge future profits growth by expanding its property portfolio. Today, Target boasts a dividend yield of 6% and an attractive P/E multiple of 15 times. And this makes it an exceptional UK share for value hunters.
Getting rich with UK shares
There’s clearly plenty of scope for investors to make a fortune with UK shares despite the murky economic outlook. And The Motley Fool’s huge catalogue of exclusive reports can help you discover even more dividend heroes like those above. So do some research and get investing today. You could get seriously rich.
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.