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As an old-school worth and revenue investor, I like shopping for and proudly owning shares that provide beneficiant dividend yields. Nevertheless, as a veteran with nearly 4 many years in monetary markets, I’m cautious of ultra-high (double-digit) money yields. And I’ve noticed one within the mid-cap FTSE 250 index that appears in danger. Learn on to search out out which…
Dividend misery
For these unfamiliar with the time period, dividends are money payouts made by some corporations to their house owners (shareholders). Nevertheless, not all listed companies pay dividends. Some corporations make losses and due to this fact lack spare money to distribute. Different companies want to reinvest their present earnings to stimulate future progress.
Do you have to purchase Taylor Wimpey Plc shares as we speak?
Earlier than you determine, please take a second to overview this report first. Regardless of ongoing uncertainties from Trump’s tariffs to world conflicts, Mark Rogers and his workforce consider many UK shares nonetheless commerce at substantial reductions, providing savvy buyers loads of potential alternatives to study.
That is why this might be a super time to safe this priceless analysis – Mark’s analysts have scoured the markets to disclose 5 of his favorite long-term ‘Buys’. Please, do not make any massive choices earlier than seeing them.
One other drawback is that future dividends will not be assured. Throughout instances of bother, they are often lower or cancelled at brief discover. Certainly, this occurred repeatedly in the course of the Covid-19 pandemic of 2020/21.
Although most member corporations of the elite FTSE 100 index do pay dividends, that’s not the case within the FTSE 250. Nonetheless, my household portfolio is full of dividend-paying shares from each indexes. What’s extra, I’m all the time looking for brand spanking new dividend dynamos so as to add to our present holdings.
Taylor made?
Shares in British housebuilder Taylor Wimpey (LSE: TW.) provide one of many FTSE 350’s highest dividend yields. But I can’t assist considering that this flood of money would possibly gradual to a trickle.
As I write, Taylor Wimpey shares commerce at 78.9p, valuing this group at beneath £2.8bn. That’s fairly massive for the FTSE 250, however nowhere close to large enough to affix the FTSE 100. And on Tuesday (28 April), the share value plunged as little as 78.45p — ranges not seen since early 2013 (13 years in the past). Yikes.
At these lowly ranges, this inventory supplied a trailing dividend yield nearing 9.7% a yr. At first look, this looks like a wealthy reward for purchasing and patiently holding these shares, however this juicy payout is unlikely to proceed.
Powerful instances
In a buying and selling assertion launched yesterday, Taylor Wimpey reported decrease weekly gross sales of latest houses, plus an order e book 5% decrease at £2.2bn. Additionally, the US-Iran struggle is prone to push up constructing prices later this yr, additional crimping Taylor Wimpey’s revenue margins.
The ultimate dividend has simply been lower from 4.66p in 2025 to 2.95p in 2026. With this saving, the corporate will purchase again extra of its personal shares. Maybe not a foul concept, given their lowly score? The agency can also scale back its interim dividend for this monetary yr, slashing that near-10% yearly yield to one thing extra reasonably priced.
I’ve debated shopping for Taylor Wimpey shares many instances in 2025/26. I’m glad I held off, as this inventory is down 9.7% over one month and 27% over six months. It’s additionally plunged 32.7% over one yr and crashed 55.9% over 5 years. (All returns exclude dividends.)
For me, this episode confirms one market lesson I do know solely too effectively from expertise. Market-beating dividend yields can generally be horribly undermined by steep share-price falls. That’s why I are inclined to keep away from shares with stagnating or unsustainable dividend payouts. In brief, what I acquire in a single hand, I can generally lose from the opposite!
