I think these are two of the best UK shares to buy for 2021

I see these as some of the best UK shares to buy for 2021, based on their defensive business models and strong competitive advantages.

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With so many uncertainties facing the UK and global economy, picking the best UK shares to buy for 2021 is challenging. 

However, I believe a couple of companies are well-placed to outperform in the year ahead. I think these businesses can continue to register profit growth, no matter what the future holds. 

UK shares for 2021

The first company on my list is retailer Pets at Home (LSE: PETS). Retail is a viciously competitive business and, usually, I try to avoid the sector. But Pets is a little different. It’s the largest retailer of pets and pet products in the UK. This gives it a unique competitive advantage.

There aren’t that many other companies offering the products and services provided by this enterprise. The rest of the market is highly fragmented, predominantly small independent retailers which may not be able to compete with the product range and price. 

As well as this advantage, the business should also benefit from the fact that consumers can’t choose to put off spending on their pets. If an animal needs food or a new bed, the owner has no choice. It has to be acquired, making the company an essential retailer. Pets is usually the best option the owner has for these items. 

Those are the two primary reasons I believe this is one of the best UK shares to buy for 2021. With these tailwinds behind the business, I think it should continue to report steady growth throughout the year and beyond. 

As well as these competitive advantages, the stock also supports a dividend yield of 1.8%. 

Hargreaves Lansdown 

My second pick of the best UK shares to buy for the year ahead is online investment platform Hargreaves Lansdown (LSE: HL). Over the past 12 months, unlike many other companies, this business has substantially increased revenues and customer numbers.

People stuck at home have played the stock market, leading to increased commission revenue for the investment platform. Some of these customers may leave in 2021 but some will stay, and this should provide additional income for the group. 

And with more customers paying to use the group services, I think there will be more cash available for marketing. This will produce a virtuous cycle. More customers generating more profits to be invested in more marketing to attract more customers. 

Those are the key reasons why I believe this one of the best UK shares to buy now. Hargreaves’ net income growth has averaged 15% per annum since 2015. Following last year’s trading boom, I reckon there’s a good chance the company may be able to surpass this in the years ahead. I think shareholders will see large capital gains on their investments as a result. 

In addition to this capital growth potential, the stock also offers a dividend yield of nearly 3%. 

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has recommended Hargreaves Lansdown. 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.

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