Is this a once-in-a-decade chance to bag a 9.9% yield from Taylor Wimpey shares?
Taylor Wimpey (LSE: TW) shares have taken a beating during recent stock market volatility. Thatâs a pain for me, as I have a big stake in the stock, but creates an opportunity for new investors. Time to consider buying?
First, a word of caution. While the FTSE 250 housebuilder offers a striking yield, the shares have struggled for years. Almost a decade ago, Taylor Wimpey topped £2. Today, it trades for just under 97p. Investors have collected a decent stream of dividends, but those payouts have only partly offset big capital losses.
However, with the shares now trading at a 10-year low, this could be an opportunity to scoop up an established British company at a greatly reduced price.
Top FTSE 250 income stock
Housebuilders have had it tough across the board. Since 2016, the sector has been buffeted by Brexit, inflation, higher mortgage rates, and the end of the Help to Buy scheme.
I bought Taylor Wimpey nearly three years ago, attracted by the yield, but the shares have been volatile ever since. I was really optimistic about the outlook for this year, with inflation falling and the Bank of England potentially cutting base rates to as low as 3%. I thought lower inflation and mortgage rates would cut costs, improve affordability and make buyers feel wealthier.
I was finally edging back into profit, with dividends reinvested, but then the Iran war began. The Taylor Wimpey share price has slumped 15% in the last month, as soaring oil prices stoke fears of renewed inflation. Mortgage rates are already rising, which could squeeze demand, depress sales, and hurt profits. Over 12 months it’s now down 14%.
Taylor Wimpey also has to absorb higher employment costs, thanks to the increase to employer’s National Insurance and two inflation-beating national living wage hikes. It has also had to spend several hundred million pounds fixing cladding fire safety issues. With so many moving parts, the share price swings are hardly surprising.
It’s not purely falling on events in Iran. Full-year 2025 results on 5 March showed a 54.3% drop in pre-tax profit to £146.5m. The order book fell slightly to £1.9bn from £2bn. The board cited âuncertaintyâ ahead of last November’s Budget and said operating profits are set to fall in 2026.
There were positives. Revenue rose 13% to £3.8bn, while completions including joint ventures increased 6% to 11,229. The average private selling price jumped £18,000 to £374,000.
Dividend shock
The trailing dividend looks sensational at 9.9%, but treat that headline figure with caution. The board cut the total payout by 1.25% in 2024 and then a much larger 19.5% in 2025, reducing it from 9.46p in 2024 to 7.62p per share. The forward yield for 2026 is now 7.85%. That’s still attractive, but below what investors expected.
With a price-to-earnings ratio of 12.2, the shares aren’t overpriced. Iâm holding on, hoping for a recovery while collecting income, albeit slightly less than I hoped. Taylor Wimpey shares are still worth considering with a long-term view, but the war and wider market uncertainty mean volatility is likely to continue. Patience required.
The post Is this a once-in-a-decade chance to bag a 9.9% yield from Taylor Wimpey shares? appeared first on The Motley Fool UK.
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Harvey Jones has positions in Taylor Wimpey Plc. 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.
