3 top UK shares to buy in August 2021

Sale agent deal to car loan contract with customer.

As we continue into what should be an interesting back half of 2021, I’m looking for stocks that can outperform in what could be a relatively choppy period in the markets. 

As a long-term investor, I like the defensiveness and steadiness these three top UK stocks provide. Let’s dive into why these are some of the best stocks on the FTSE I’m considering right now for my portfolio.

Top UK shares: Anglo American

Pre-eminent miner Anglo American  (LSE:AAL) is one of the UK shares I’ve been considering for some time.

Indeed, as far as defensiveness goes, Anglo American is a company worth watching. Given the rise in commodity prices we’ve seen take hold of late, this thesis is stronger than ever. Should commodity prices continue to remain stable or climb higher, Anglo American stands to be a key beneficiary. Of course, risks to the contrary are present with this economically sensitive name.

Unsurprisingly, the company’s profitability has been impressive of late. As fellow Fool contributor Manika Premsingh pointed out in a recent piece, Anglo American’s 1,000% profit increase year-over-year is worth considering. Accordingly, I’m going to be watching this stock closely, and will consider adding on share price weakness.

Unilever

An absolute behemoth in the consumer goods space, Unilever  (LSE:ULVR) has perhaps one of the most stable share prices of any such company in the world in recent years. This is reason enough for me to put this near the top of my list of defensive UK shares.

Concerns about inflation and rising costs throughout the production chain have dampened my outlook on Unilever to some extent. In many ways, these risks make Unilever a hard stock to justify from a growth perspective in my portfolio. However, it’s also my view that these risks may be largely baked into Unilever’s stock price right now.

The company’s financials have come in strong of late, as Unilever pushes into e-commerce. Additionally, the company’s valuation at around 20-times earnings is enticing to me. This makes for an intriguing defensive value argument for Unilever’s potential inclusion in my portfolio.

Aviva

One stock I’ve been taking a hard look at recently is Aviva (LSA:AV). This insurance juggernaut happens to be one of the best UK shares in this space, in my view. I think this company’s fundamentals and orientation toward the domestic UK market make it a top play in the global insurance space as well. Aviva is the UK’s largest insurer, with 23% of the market share in the UK.

I’m looking at the UK market as a key beneficiary of the longer-term economic reopening coming out of this pandemic. Accordingly, I like Avivia’s positioning as the leading UK insurance play in this market.

However, risks persist in the insurance space tied to interest rates. Lower for longer interest rates reduce the amount insurers are able to earn on fixed income investments, from investing their float (premiums less claims). Accordingly, if government bond yields remain persistently low, as they have since the pandemic began, investors in insurance companies like Aviva could see longer-term growth stunted to some degree. On the flip side, should rates rise, this could provide a longer-term boost to earnings as well.

Accordingly, I like the risk-reward with this stock. This one of the UK shares I’m considering for my portfolio.

The post 3 top UK shares to buy in August 2021 appeared first on The Motley Fool UK.

Like these top UK shares? Here are a few more to consider right now:

5 Stocks For Trying To Build Wealth After 50

Markets around the world are reeling from the coronavirus pandemic…

And with so many great companies trading at what look to be ‘discount-bin’ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be daunting prospect during such unprecedented times.

Fortunately, The Motley Fool is here to help: our UK Chief Investment Officer and his analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global lock-down…

You see, here at The Motley Fool we don’t believe “over-trading” is the right path to financial freedom in retirement; instead, we advocate buying and holding (for AT LEAST three to five years) 15 or more quality companies, with shareholder-focused management teams at the helm.

That’s why we’re sharing the names of all five of these companies in a special investing report that you can download today for FREE. If you’re 50 or over, we believe these stocks could be a great fit for any well-diversified portfolio, and that you can consider building a position in all five right away.

Click here to claim your free copy of this special investing report now!

More reading

  • The Unilever share price comes with a 3.6% dividend yield. Should I buy?
  • Top British stocks for August
  • Why I’d buy Anglo American shares now
  • The Unilever share price has dropped back. Should I buy?
  • The Unilever share price (ULVR) is falling. Here’s why it’s on my August shortlist

Chris MacDonald has no position in any shares mentioned. The Motley Fool UK has recommended Unilever. 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.