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Depending on your investment goals, diversifying into foreign stocks might make sense for your portfolio. U.K. stocks represent a solid choice among foreign stocks as far as dividends and capital appreciation go. Leading U.K. stocks can also conveniently be bought using American Depository Receipts (ADRs) that are traded on major U.S. stock exchanges.
In this article, we examine some of the best U.K. stocks to consider for your portfolio.
Highlighted UK Stocks
- GlaxoSmithKline plc (NYSE: GSK)
- Unilever (NYSE: UL)
- Micro Focus International (NYSE: MFGP)
- Aviva plc (OTCMKT: AVVIY)
- British American Tobacco (NYSE: BTI)
|Symbol||Company||% Change||Price||Dividend Yield||Invest|
|$43.69||1.9874 / 4.65%||Buy stock|
|$46.25||1.9434 / 4.36%||Buy stock|
|MFGP||Micro Focus Intl||
|$3.67||0.291 / 8.29%||Buy stock|
|AVVIY||Aviva PLC DR||
|BTI||British American Tobacco||
|$43.95||2.9616 / 6.96%||Buy stock|
Table of contents [Show]
Overview: Best UK Stocks
GlaxoSmithKline was formerly called GlaxoWelcome before its merger with U.S. pharmaceutical company SmithKline Beecham in 2000. The combination has made GlaxoSmithKline the 6th largest pharmaceutical company in the world.
Unilever was the product of the 1929 merger of British soapmaker Lever Brothers and the Dutch company Margarine Unie. The transnational company is one of the world’s largest consumer product manufacturers, and 2.5 billion people use its products worldwide.
Micro Focus International was founded in 1976 and consists of a global information technology (IT) company with more than 40,000 clients. The company specializes in analytics and big data, IT operations management, software collaboration solutions, and mainframe and security applications.
Aviva plc is a leading international insurer with 33.4 million customers globally. It was founded in 2000 after the merger of 2 large U.K. insurers, Norwich Union and CGU plc, and is the 14th largest insurance company in the world.
British American Tobacco is the world’s 2nd largest cigarette manufacturer that dates back to a 1902 joint venture between Imperial Tobacco Company and the American Tobacco Company. The company owns or has interest in tobacco companies in approximately 180 countries, with 11 million points of sale and 150 million consumers worldwide.
Best Online Brokers for UK Stocks
Because the U.K. stocks mentioned above can be purchased using ADRs on U.S. exchanges, you can buy them through any broker with access to U.S. markets. You can also buy U.K. stocks directly on the London Stock Exchange with an Interactive Brokers or Charles Schwab International brokerage account. Other online brokers you can purchase U.K. stocks directly through include TD Ameritrade, E*TRADE and Robinhood.
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
- Active traders
- Intermediate traders
- Advanced traders
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Intuitive trading platform with technical and fundamental analysis tools
- Does not support trading in mutual funds, bonds or OTC stocks
Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.
Get started right away by downloading Moomoo to your phone, tablet or another mobile device.
- Cost-conscious traders
- Active and Advanced traders
- Over 8,000 different stocks that can be sold short
- Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
- No minimum deposit to open an account.
- No chat support
E*TRADE is an online discount trading house that offers brokerage and banking services to individuals and businesses. One of the first brokers to embrace online trading, E*TRADE not only survived both the dot-com bubble and Recession — it thrived. You can choose from two different platforms (one basic, one advanced). E*TRADE is a suitable broker for traders of most skill levels, whether you want to buy mutual funds and hold them for decades or dabble in options swing trading. E*TRADE offers a library of research and education materials to help you out.
- Active traders
- Derivatives traders
- Retirement savers
- Sophisticated trading platforms
- Wide range of tradable assets
- Exceptional customer service
- Limited currency trading
- Higher margin rates than competitors
- No paper trading on its standard platform
This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.
Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.
Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.
- Price earnings growth valuations
- Easily evaluate investment opportunities
CenterPoint Securities is ideal for active traders who demand access to advanced tools and services. While investors and casual traders are likely to be content with the basic offerings of traditional online brokerages, active traders will benefit from CenterPoint’s suite of advanced trading tools. If you value execution quality, access to short inventory, advanced trading platforms, and accessible customer service, CenterPoint is an excellent choice.
- Intermediate to Advanced traders
- High-volume traders
- Momentum traders
- Short sellers
- Unrivaled access to short inventory
- Flexible order routing for improved executions
- Discounts for active traders
- Advanced platform with fast executions
- Reliable customer service
- Not designed for beginner or low-volume traders
Features to Look for in UK Stocks
- Strong balance sheet: The company’s balance sheet should show increasing earnings per share, as little debt as possible in its debt to equity ratio and a positive outlook for future earnings. Other important balance sheet numbers would be the company’s assets and cash position.
- Dividend yield: A company’s dividend yield is computed by dividing the amount of its dividend by the price of its stock. A high dividend yield makes a stock more attractive to investors looking to make income on their investments.
- Defensive qualities: With the level of uncertainty currently in the markets resulting in geopolitical issues, investing in economic sectors that hold their value through such challenging times and the probable future economic repercussions makes the most sense.
UK Stocks to Watch Out for This Year
After the sharp decline of U.K. stocks in late March due to the pandemic, many U.K. stocks have since rallied correctively to recover a significant percentage of their losses. All the U.K. stocks mentioned below currently trade lower than their mid-January pre-pandemic prices. None of the stocks reviewed presently qualify for our stocks under $20 list.
1. GlaxoSmithKline plc
GSK stock has recovered substantially from its March 23 low of $31.85, currently trading at $42.15, which is just roughly 10% of the $47 level the stock was trading at in mid-January, before the World Health Organization (WHO) declared the COVID-19 outbreak a pandemic on March 11. GSK stock has a dividend yield of 5.85% and quarterly earnings per share of $0.31. Because of the stock’s dual listing in London and New York, you don’t have to buy an ADR to purchase this stock.
UL stock traded at the $60 to $64 level from May 2019 until early February 2020. The stock then made its yearly low of $44.62 on March 23 after the WHO’s March 11 pandemic announcement. The stock has since recovered to over $50 per share in early May 2020 and has a dividend yield of 3.5%.
Despite likely changes in consumer preferences after the pandemic, Unilever seems well-positioned as a maker of a variety of soap-based and personal hygiene products, which could offset possible losses in its restaurant food-related sales.
3. Micro Focus International
MFGP stock made its yearly low of $3.60 on March 30, 2020, but it then rallied to close at $5.70 in early May, just disqualifying it from our list of stocks under $5. While the stock offered a substantial dividend before the COVID-19 crisis, the dividend has been suspended until after the effects of the pandemic are more clearly determined. Interestingly, TMT Finance reported that Micro Focus has recently been holding private talks with possible buyers.
4. Aviva plc
Aviva plc is the 14th largest insurer in the world and paid out £33.2 billion in claims and benefits in 2019. AVVIY shares traded as low as $4.90 on March 23, 2020, which was significantly worse than the $11 level the stock was trading at in mid-December 2019. AVVIY shares have since recovered somewhat and currently trade at $5.89 with a dividend yield of 7.22%, which qualifies Aviva stock for both our stocks under $10 and stocks under $20 lists.
5. British American Tobacco
Due to its principal business that depends on tobacco consumption, BTI stock follows the general market to a certain degree but also tends to show resilience in the long term due to the persistence of tobacco use. BTI stock made a low of $27.64 on March 23 and then rebounded to its current level of $36.98 per share.
Before the WHO’s pandemic announcement, BTI stock was trading in the $42 to $44 per share range. The stock currently trades with a PE ratio of 11.54 on trailing 12-month earnings of $3.22 as of December 31, 2019.
Biggest UK Stocks Movers of the Day
Since U.K.-listed companies generally have their base in the U.K., their stock will already have a half day of trading by the time U.S. markets open. All of the above mentioned stocks could therefore be big premarket movers, especially upon an important announcement such as earnings, a potential takeover or a reopening of regions after the pandemic shutdowns.
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Micro Focus Intl
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British American Tobacco
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UK Stocks: Is Now a Good Time to Buy?
Depending on your financial goals and portfolio, watching the U.K. market for the optimal time to buy after the pandemic-related selloff that started in March would make the most sense.
Investors looking for income would probably do well buying U.K. stocks that offer above-average dividend returns. Those looking for capital appreciation should look for companies that seem likely to remain out of insolvency and whose stocks seem ready to rise significantly in more favorable market conditions once economic regions reopen after the wave of pandemic-related shutdowns.