Soon after the coronavirus crisis began, many companies had to scrap their dividends. But over the past months, dividend shares began to resume payouts. In my view, the current situation in the markets makes dividend shares the top strategy for the next year. Let me explain why.
The UK stock market is in a tricky place right now. Analysts and economists are still trying to figure out the disconnect between the stock markets and the economy, which has been one of the most discussed topics in the financial world this year. Although the world economy has suffered its deepest recession and is expected to shrink by 5.2% according to World Bank forecasts, stock markets have actually rallied.
Generally, I would say that the most important reason for the rally is persistently low interest rates, which led to the boost in stock prices. And as long as interest rates remain low, I think dividend shares with high yields are key to building a successful portfolio right now. As such, I’m going to take a look at three FTSE 100 shares that offer a high dividend yield.
Passive income: 3 dividend shares I’d buy right now
Taking the above into consideration, here are three top UK shares with high dividend yield I’d buy right now for a passive income.
Standard Life Aberdeen — The nearly 8% dividend yield currently offered by Standard Life Aberdeen makes this stock the perfect buy and hold option for me right now. This high dividend yield is especially an attractive return in the current low-interest-rate environment.
This year, Standard’s shares dropped by nearly 20%, however, the investment company is starting to show good signs of recovery lately. Since late October, Standard’s shares rose by 25%, and the company’s new CEO Stephen Bird brings new hope for investors. Looking forward, Standard Life Aberdeen has recently announced that it plans to sell its Parmenion platform. In my opinion, this is good news for the company and might push the stock price higher.
Aviva — Shares in Aviva have fallen around 24% since the start of the year. Still, in my opinion, it remains one of the best UK shares to buy right now. A month ago, I suggested that Aviva shares looked like a bargain. Since then, its shares soared from 256p on Oct 29 to 322p on Nov 29, an increase of 25%. Looking forward, I strongly believe that shares of Aviva will continue rising as it offers a high yield of 6.5%.
British Petroleum — The oil and gas company has seen its shares lose around 45% of its value in 2020. This was quite expected given the fact the Covid-19 has paralyzed oil and gas companies. Moreover, the oil crisis in March had a huge impact on oil companies like BP.
Still, British Petroleum pays a quarterly dividend for shareholders, and its annual yield, which stands at 6.01%, makes it one of the best dividend FTSE 100 shares. Overall, I think BP is a great bargain right now for a long-term investment.
Tom Chen 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.