2020 has been a difficult time for dividend investors. Hundreds of UK shares have axed, postponed, or reduced shareholder payouts in response to the Covid-19 outbreak and its significant economic impact. There could be more drastic action coming down the pipe should the global economy endure a painful and prolonged downturn too.
There are plenty of UK shares that continue to offer chunky yields. But which of these British stocks should you buy and which should you avoid?
Royal Dutch Shell’s 5.5% dividend yield looks quite delicious. But the multitude of problems the FTSE 100 oilie faces makes this UK share a risk too far in my book. It’s not just the short-term troubles it faces as the slumping global economy smacks oil demand.
The fight Shell has to adapt to renewables threatens to create plenty of problems over a longer time horizon too. The fossil fuels giant may struggle to keep pace with nimbler green energy operators and faces a sharp slump in crude sales in the meantime.
I wouldn’t be tempted to buy Land Securities either, despite its tasty 4.5% forward dividend yield. In July, the property trust announced plans to reinstate dividends later this fiscal year. But I’m more than a little sceptical that it’ll be able to fulfil this aim.
Shaftesbury illustrated the huge pressure on retail property owners by declaring last week that almost 60% of its own rents due for the second half had gone unpaid. Land Securities has also seen rents plummet since the Covid-19 outbreak, and the end of the government support in the coming months threatens to exacerbate the problem.
A better dividend stock
In my opinion, investors seeking chubby dividends from UK shares would be better off investing in Begbies Traynor. Yields here aren’t the biggest (for 2020 its reading sits at 3.4%). But this sort of inflation-beating figure can still provide a decent return for your money. And, in my opinion, the insolvency services expert is in much better shape to keep growing in the current climate.
British Chambers of Commerce data shows that almost half of British businesses reported falling sales in the third quarter, while two-thirds have seen their cash flows keep deteriorating. Counter-cyclical shares like Begbies Traynor are ideal UK shares in times like these. And, unfortunately, the historic slump in the British economy suggests its services will surge in the short-to-medium term.
Helping you to get rich and retire early with UK shares
Bebgies Traynor’s just one quality UK share I’d buy to receive big dividends in the near term and beyond though. The London Stock Exchange is packed with income heroes like these. And with the help of The Motley Fool and its huge library of special reports you can find top dividend stocks that could make you rich despite the global economic downturn. So do some research and get investing today.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Landsec. 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.