Entering text into the input field will update the search result below

An Attractive Stock With A 7% Dividend Yield And Solid Growth Prospects

Mar. 06, 2018 4:30 PM ETTaylor Wimpey plc (TWODF)
Michael Turner profile picture
Michael Turner


  • Taylor Wimpey's stock price is approaching its yearly lows due to uncertain macroeconomic conditions in the UK.
  • Despite declining home builder margins, Taylor Wimpey is set to remain profitable moving forward.
  • With a PE ratio of 11 and a dividend yield of 7%, this stock is a fantastic dividend income addition to any portfolio.

Note this article refers to the UK listed Taylor Wimpey plc, and all amounts given are in GBP unless otherwise specified.

The Stock

Taylor Wimpey plc is a residential developer with operations in the UK and Spain. The main attraction to the company's stock comes from its fantastic dividend distribution which results in a yield of around 7% based on today's price.

Brexit worries have caused jitters in the residential housing market in the UK, causing most building related stocks to fall, however, the chronic housing shortages in the UK will continue indefinitely. While margins may depress slightly in the short term in the industry as housing values fall, Taylor Wimpey's solid financial position is strong enough to steer the company through these temporary market fluctuations:

(Source: Taylor Wimpey's 1H18 Analyst Presentation)

During 2017, Taylor Wimpey's underlying build cost per unit increased to £143.7k from £137.2k in 2016, which reflects the increasing inflation in underlying build costs (an increase of 3.5% y/y):

(Source: Taylor Wimpey's 1H18 Analyst Presentation)

Despite these issues, the current low market valuation combined with a strong support level at 180 GBX should limit any downside risks in the stock, providing an attractive opportunity to enter a long term position:

(Source: Google Finance)

International Expansion

The market has not priced in any potential growth in Taylor Wimpey's international operations, despite positive indicators in the company's Spanish operations:

(Ryan Mangold - Group Finance Director, Taylor Wimpey): Spain delivers £26.8 million worth of operating profit in the period; it’s up 30 percentage points on 2016, off a fairly similar number of home completions. And with a strong order book of over 300 homes and by value up by 21% on 2016, and demand remaining good, positions the business really well to continue to make progress into the future. We have maintained our investment strategy in Spain of marginal growth and the

This article was written by

Michael Turner profile picture
I am based in governance roles in Sydney, Australia - as such, a large portion of my research is focused on the quality of governance in mid-cap ASX listed corporations.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You


Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.