2020 has been a year to forget for many dividend investors. Around half of all FTSE 100 companies have postponed, reduced, or axed shareholder payouts as they responded to the threat of Covid-19. The reductions continue to come thick and fast too as UK shares of all shapes and sizes move to protect their balance sheets.
The brutal scale of dividend declines is laid bare by a fresh study from Janus Henderson just released. This shows global dividends fell 22% on a headline basis (including special dividends) in Q2, to $382.2bn. This was the worst quarterly drop since records began almost a decade ago. And things have been particularly bad for owners of UK shares. According to the report, dividends from London-listed companies plummeted 54% on a headline basis during the second quarter.
3 UK shares I’d buy today
But don’t get too down in the dumps. Many UK shares have continued to pay big dividends to their shareholders despite the Covid-19 crisis. Many even kept lifting payouts despite the severe global downturn. We at The Motley Fool believe the recent stock market crash provides great opportunity to buy some quality dividend-paying UK shares at rock-bottom prices. And here are a few on my personal watchlist.
- While other UK shares have been slashing dividends, Centamin has supercharged shareholder payouts. The interim dividend was raised 50% earlier this month on the back of the surging gold price. And City analysts expect payouts to keep rising over the next couple of years. Therefore the miner sports meaty dividends of 5.2% and 5.3% for 2020 and 2021 respectively. Centamin’s attractive forward price-to-earnings (P/E) ratio of 15 times provides another reason to buy it today too.
- GlaxoSmithKline meanwhile is tipped by the number crunchers to keep its policy of paying annual dividends of 80p. This shouldn’t come as a surprise of course as drugs makers are some of the most reliable earnings generators out there. As a result, the FTSE 100 company sports 5.2% through to the end of next year. Happily a low P/E ratio of 13 times for 2020 sweetens the investment case.
- FTSE 100 giant Legal & General Group boasts an incredible P/E multiple of just 8 times. But unlike Glaxo, City brokers expect the dividend to rise in 2020, creating a stunning 8% yield. The insurer has a formidable balance sheet to allow it to continue paying gigantic dividends, with £7.3bn worth of surplus regulatory capital and a £3.5bn credit default reserve on its books. It’s well placed to weather the economic downturn and keep raising payouts in 2021.
Getting rich after the stock market crash
These are just a taster of some of the great value UK shares I’m thinking of buying right now. In truth there are plenty of dividend-paying stocks that are too good to miss after the stock market crash. And The Motley Fool’s vast library of special reports can help you dig them out and get rich in the process.