I continued to buy UK shares in my Stocks and Shares ISA in 2020 despite the global economic downturn. I plan to keep building my shares portfolio in 2021, too, even though the outlook remains as clear as mud.
And why wouldn’t I? There are still stacks and stacks of top stocks that should deliver brilliant shareholder returns in 2021 and beyond. Here are two top-quality, dividend-paying UK shares on my ISA radar today:
#1: United Utilities Group
Water supplier United Utilities Group (LSE: UU) is one of the safest bets out there for these uncertain times. The essential nature of its service provides it with terrific earnings visibility whatever happens to the domestic economy. This underpins the FTSE 100 firm’s long, long record of paying above-average dividends.
Utilities providers aren’t completely without risk, of course. The threat of legislative action to rein in shareholder rewards is always running in the background. For the next half a decade or so, though, this is not something that United Utilities investors need to worry about. Ofwat’s seventh Asset Management Plan runs until 2025, for one, giving it a clear view for the next several years. And the UK share doesn’t have to worry about the threat of nationalisation under a future Labour government until around that time either.
United Utilities’s huge defensive qualities should lay the groundwork for more dividend hikes in the short term and beyond. City analysts agree with me and reckon annual payouts will rise this fiscal year (to March 2021) and again in the following period. Consequently, the FTSE 100 share sports huge yields of 4.9% and 5% for this year and next.
FTSE 250 stock Contour Global is another UK share that’s a perfect buy during the era of coronavirus. In fact it’s proven even more resilient than United Utilities in the past 12 months. It said back in October that “we have experienced no material operational or financial impact from Covid-19”.
Quite a relief for UK share investors nervous about building their portfolios in 2021, then. City analysts certainly aren’t nervous about the power station operator. They reckon annual earnings will rise in the teens this year. And this leads to predictions of more market-beating dividends. This means ContourGlobal’s yield for 2021 sits at a gigantic 6.5%.
Don’t just think that the business is a comfort blanket for these turbulent times, however. Rocketing energy consumption across the world means that demand for ContourGlobal’s services should continue rising for many years into the future. The US Energy Information Administration reckons that global world energy consumption will soar by around 50% between 2018 and 2050. More and more power plants will be needed to meet this need, obviously.
And what’s more, this UK share remains busy on the acquisition front to give future earnings an extra boost. Last month, ContourGlobal spent almost $840m on a string of plants in the US and the Caribbean.
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.