I don’t care about the cloudy outlook for the global economy. I’ve continued to buy UK shares in my Stocks and Shares ISA during 2020. And I plan to keep building my shares portfolio as we head into 2021.
There are plenty of quality stocks out there for long-term investors like me to choose from. Many British shares are likely to deliver brilliant profits growth next year, regardless of broader economic conditions. A great number of these can be picked up at dirt-cheap prices following the early 2020 stock market crash too.
3 top UK shares for 2021
Here are three top UK shares I think are perfect buys for 2021. I’d happily buy them in my own ISA and hold them for the long haul:
#1: United Utilities
Even if the global economy bounces back strongly in 2021 it’s likely conditions on these shores will remain difficult. It’s not just a long Covid-19 hangover that threatens UK GDP, a consequence of its reliance on a strong services sector. The economic consequences of Brexit also threaten to stymie growth next year.
This is why FTSE 100 share United Utilities Group is such a supreme buy today. It can expect the number of customers missing payments to rise, of course. But it can weather the worst of the storm, helped by the fact it has no competition in the territories in which it operates.
This resilience also gives UK utilities shares like this the confidence to keep raising dividends, whatever the weather. Consequently, United Utilities carries a large 4.7% forward dividend yield.
#2: B&M European Value Retail
One of the biggest retail stories of the 2010s was the growth of e-commerce. The second was the soaring popularity of discount retailers like Aldi and Lidl. Cash-strapped shoppers flocked through their doors in the wake of the 2008/2009 banking crisis and subsequent economic downturn. And consumers stayed there as the surprising quality of the foods these supermarkets stocked changed their expectations for good.
The same theory makes B&M European Value Retail one of my top UK shares for 2021. It’s enjoyed a roaring trade since Covid-19 hit as huge economic uncertainty has prompted shoppers to tighten their belts. It’s likely that footfall in its shops will burst higher next year too as a Covid-19 vaccine is rolled out and prolonged lockdowns are averted.
#3: Diageo
Drinks giant Diageo is another UK share that can expect a strong profits uplift in 2021. A coronavirus vaccine would create a significant improvement in sales from the global hospitality sector. An upswing in the world economy would also lift demand for its beverages as consumer appetite improves too.
However, Diageo can expect revenues to pick up, even if the economic landscape remains depressed. History shows us that sales of alcoholic drinks remain strong during depressed periods.
So, this FTSE 100 stock, thanks to its wide geographic footprint, powerhouse brands, and broad presence across multiple drinks categories, is well-placed to deliver big profits growth next year, whatever happens.