Investors in UK shares are in a good place. As stock markets rise, the prices of shares we own rise too. And with better economic conditions, dividends are rising as well. As a result, not only are there capital gains to be made, there is also healthy passive income to be earned.
I think the best UK shares today are the ones that combine both these qualities. The good news is that among FTSE 100 shares alone there are plenty of choices available. The three listed below are among the best UK shares for me based on these criteria.
#1. Royal Dutch Shell: oil play
Since the stock market rally of November last year, oil biggie Royal Dutch Shell has seen a sharp increase of 64% in its share price. This indicates that investors expected oil to take off as the economy reopens. And they were right. Oil prices have zoomed ahead this year. And this has shown up in both Shell’s results and its recent dividend increase.
Even though its share price increase over the past year is less encouraging at 20%, I reckon that it can rise significantly from here. Not only is its performance expected to stay robust in the foreseeable future, its dividends can keep rising as well.
#2. Persimmon: eye-watering dividend yield
The FTSE 100 house builder Persimmon has an eye-watering dividend yield of 8% at present. This is when its share price is still quite close to the near all-time highs it touched recently.
I reckon that its share price could see-saw in the short term because of uncertainty about house prices as supportive policy measures are withdrawn. But going by its trading statement released yesterday, it is clear that the company’s performance can stay strong. So its dividends should not come under pressure.
Barring any unforeseen dip in the property markets, I think this is a good stock to buy. This is also because it has given some stellar returns on capital over time.
#3. Rio Tinto: commodities on a roll
Multi-commodity miner Rio Tinto, much like Persimmon, has seen a rising share price over time. Over the past five years, its share price has risen by some 150%. And even since July last year, it is up 31%, when it had already recovered a fair bit from the stock market crash of March 2020.
Despite these impressive share price increases, its dividend yield is still at a healthy 5.7%. With the economy expected to stay strong over the next few years, industrial metals should stay in demand. This means that Rio Tinto will continue to make gains, like it did last year.
A final note
It is always possible that the pandemic can make a comeback, that another unexpected challenge comes up for the global economy and stock markets see another big wobble. But I like to work with the most probable scenarios. And based on that, it looks likely that these are indeed among the best UK shares to buy today.
Manika Premsingh owns shares of Royal Dutch Shell. The Motley Fool UK has no position in any of the shares mentioned. 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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