CORRECTION: This article has been updated to clearly reflect that Aviva suspended its dividend in April.
Our message here at The Motley Fool couldn’t be more emphatic. Stock market crashes are inconvenient but they shouldn’t discourage us from buying UK shares. The savviest share investors are the ones who use market crashes as an opportunity to buy top stocks at the lowest prices.
Over time, the impact of stock market crashes tends to be absorbed. This is why studies show that long-term investors tend to make an average annual return of up to 10% with the right investment strategy. Those that earn the biggest returns (like ISA millionaires) are those that build a well-balanced portfolio at little cost. And market crashes provide an opportunity to do just that.
Billionaire investor Warren Buffett famously implored stock investors to “be fearful when others are greedy, and greedy when others are fearful.” The best bargains can be dug out in the aftermath of a stock market crash. And I reckon these two UK shares are brilliant buys following the 2020 financial market meltdown.
Too cheap to miss after the market crash
I’d be happy to buy PayPoint for my own ISA following the stock market crash. The business – which provides retail terminals for convenience store operators – now trades on an undemanding forward price-to-earnings (P/E) ratio of 12 times. It boasts a monster 7.5% dividend yield for this fiscal year, too.
FTSE 250 share PayPoint is one of the hottest tech companies this decade. Its terminals allow retailers to carry out a wide range of electronic point of sale (or EPoS) transactions and other functions quickly and easily. This means that adoption of its cutting-edge PayPoint One platform continues to outperform all expectations. What’s more, the cloud-based nature of the platform means that PayPoint can adapt, improve, and add to its services to keep retailers interested in its tech in the years ahead.
10% dividend yields!
I believe that Aviva is also too cheap to miss after the market crash. Having fallen a third in value since January 1, and suspending its dividend in line with guidance from regulators, this FTSE 100 stock trades on a forward P/E ratio of 6 times. More tantalisingly, though, at current prices this UK share carries a mighty 10% dividend yield for 2020 – if, as I suspect, Aviva reinstates the dividend later this year.
There are fears over the health of Aviva’s balance sheet but I believe these concerns are factored in at current prices. Indeed, I reckon the steps the business is taking to reduce its leverage could lead to a steady share price revival. In the long term, meanwhile, I’m confident that planned streamlining and a focus on its core UK markets where Aviva’s branding is strongest will reap handsome returns.
Buying Aviva and PayPoint shares is a great idea at current rock-bottom prices. But they’re not the only brilliant bargains worth close attention following the stock market crash. There’s a galaxy of great stocks for ISA investors to create spectacular returns from in the years ahead. And I for one plan to keep buying UK shares for my ISA after the market crash.