Why on earth would anyone want to invest for their future in a Cash ISA? Interest rates are lurking below 1% — and threatening to continue falling as the Bank of England flirts with more interest rate cuts. That means they offer very little opportunity for us to make a big cash pile for retirement. This is why I invest in UK shares instead.
Link Group says the average dividend yield on UK shares for the next year ranges between 3.3% and 3.6%. Throw in the possibility that share prices could rebound strongly over the next year or two, and it seems to me like buying UK shares is a much better option than using a Cash ISA.
3 BIG-yielding UK shares
Let’s say, however, I’m content with that sort of dividend yield. And I want to get generate larger income flows with your hard-earned cash. Well here are three top UK shares with chunky yields. But which would I buy for my own Stocks and Shares ISA?
- Admiral Group is a perfect pick for those seeking market-beating dividends. The yield for this year sits at a whopping 5.4%. And it has a few tricks up its sleeve to continue paying big shareholder rewards. It has excellent brand power, and its products are also indispensable, irrespective of broader economic conditions. This allows the profits to keep rolling in whatever the weather. Furthermore, Admiral has had to pay out fewer claims recently as lockdowns have reduced traffic volumes. That gives its balance sheet an extra shot of juice and provides more wiggle room to continue paying bumper dividends.
- I wouldn’t consider buying Town Centre Securities shares for my ISA though. It’s true rent collection at the property giant has been stronger than that of many of its peers. It’s collected 75% of rents for the current quarter, for example. But I worry this UK share will increasingly struggle as the economy toils and consumer confidence dives. According to GfK, confidence has slumped to its lowest since May as consumers fret over the prospect of surging unemployment. Footfall at its retail assets and car parks are also under threat from more mass lockdowns, and rents at its office spaces are pressured by the toiling UK economy. So I think Town Centre Securities is a risk-heavy buy today. I’m not even tempted by its 3.8% forward dividend yield.
- I’d be far happier to invest in Warehouse REIT.Unlike the aforementioned property stock, which also stands to lose out from the growing popularity of e-commerce, this other UK share is benefitting from surging online shopping traffic. Warehouse REIT has ambitious plans to continue building its portfolio of in-demand assets as well. And it purchased two logistics assets in the East Midlands and Cheshire last month for £82m. It has the financial firepower to continue on its base-building programme too, as well as to keep paying big dividends. This is why the property powerhouse boasts a massive forward 5.8% yield.
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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Admiral Group and Warehouse 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.