Many investors might be hesitant about buying UK shares at the moment. Indeed, the outlook for many London-listed companies is currently highly uncertain. However, the best investments for 2021 could be those other investors are avoiding.
Here are five companies that I’d consider buying for 2021.
UK shares to buy
It’s impossible to tell if the coronavirus crisis will still be ravaging the UK economy next year. Therefore, the best investments for 2021 could be the companies that have performed well this year.
One option is insurance group Admiral. This company has managed to escape the worst of the crisis as it benefited from a lower level of insurance claims at the height of the lockdown.
This has helped the company outperform expectations for the year so far. Higher profits have also supported the group’s dividend. The stock currently yields 5.4%.
Admiral’s peer, Direct Line, could also be one of the best investments for 2021. The company has benefited from the same themes as its larger peer. Better than expected profitability in the first half of the year is projected to yield a bumper dividend distribution from the group.
A payout of nearly 33p per share has been pencilled in for this year. That gives a prospective dividend yield of 12% on the current share price.
Demand for luxury goods and services has fallen this year, but analysts expect demand to recover quickly when the crisis is over. With this being the case, I think luxury retailer Burberry could be an excellent addition to any portfolio of UK shares in 2021.
The company has numerous attractive qualities. It has consistently reported large profit margins, strong cash generation, and healthy shareholder payouts. I think it is highly likely these themes will continue when the crisis is over, and Burberry can capitalise on the growing demand for luxury goods.
Best investments for 2021
Bunzl is undoubtedly one of the best UK shares to own in any market environment, I feel. Over the past decade, the company has gone from strength to strength as management has followed a buy-and-build strategy.
This year, the company’s growth has continued. That’s why I think it could be a good investment for 2021 too. Bunzl has already proven that it can weather the coronavirus storm.
If the crisis continues into 2021, Bunzl seems to be one of the best-positioned businesses to cope with the uncertainty. A dividend yield of 2% also sweetens the appeal.
Finally, I think it could be worth considering recruitment business Robert Walters as a recovery play. Recommending a recruitment business as one of the best shares to buy for 2021, might seem silly considering the state of the global employment market.
However, the company has been here before, in 2008, employment activity plunged. But in the years after, as the market recovered, Robert Walters produced strong returns for investors. I think it’s likely it could do the same this time too, which is why I think it could be worth buying the stock as part of a diversified basket of UK shares in 2021.
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Rupert Hargreaves owns shares in Admiral Group. The Motley Fool UK has recommended Admiral Group and Burberry. 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.