The prospect of a severe economic downturn doesn’t mean that you and I should stop buying quality companies today. As stock investors it’s still possible to make decent returns by buying some defensive UK shares in something like a Stocks and Shares ISA.
There’s plenty of UK shares out there that will still generate profits during the current recession. Some of them are will actually thrive while the rest of the economy struggles. And while their prices may have remained resilient despite the stock market crash many of them still appear to be trading far too cheaply at recent prices.
3 cheap UK shares with chunky dividends
Stock pickers can’t afford to stop investing despite the poor economic outlook. The paltry State Pension means that we all need to continue taking steps to safeguard our financial futures today. So let me talk you through some of the top UK shares that I’m thinking of buying today for their excellent defensive qualities.
- Begbies Traynor Group is likely to see demand for its services boom in the short term. Why? With furlough schemes ending soon the number of corporate insolvencies looks set to jump. But don’t just consider this business as a great buy for the here and now. Huge spending on acquisitions as well as huge organic investment is boosting its market share and enhancing its long-term profits outlook as well. Today Begbies Traynor trades on a reasonable forward price-to-earnings (P/E) ratio of 14 times. And it boasts a 3.5% dividend yield as well.
- A murky outlook for the British economy is likely to continue blasting precious metals prices to the stars. And this makes gold miner Trans-Siberian Gold a top buy today. It’s a UK share that trades on a forward P/E ratio of 7 times and carries a healthy 2.7% dividend yield. It’s worth noting that Brexit concerns have helped drive yellow metal prices to record highs over the past couple of years. So signs that the chances of a no-deal Brexit are rising bode well for gold prices too.
- I’d also buy power plant operator Drax Group today. It’s a UK share that’s ideal for even the most risk-averse stock investors. The essential role of electricity in today’s society provides it with exceptional profits visibility. And its low earnings multiple of 10 times factors in the chances of forecasts being blown off course for any reason. One final sweetener: at current prices Drax sports a near-6% dividend yield.
Buying after the stock market crash
Drax et al are great stocks to buy despite the poor economic outlook, then. But they’re just a few of the cheap UK shares that could help you get rich over the next few years. The Motley Fool’s huge library of articles and exclusive reports reveals even more top bargains for you to buy today. I believe the recent stock market crash presents a rare opportunity for you and me to turbocharge our investment returns.
