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I fee Taylor Wimpey (LSE: TW.) as one of many FTSE 100‘s best long-term income shares. But the past 10 years have been shocking for the share price, sending it down more than 40%. It’s all been because of excessive rates of interest and costly mortgages placing strain on the entire property sector, following the large pandemic hit.
However we’re taking a look at a fats forecast 8.6% dividend yield now. The enterprise itself appears to be in good well being. And I reckon 2026 might mark the most effective alternative in a decade to contemplate getting again into Taylor Wimpey and different constructing shares.
Dividend outlook
The corporate did shave somewhat off the interim dividend with first-half outcomes, dropping it to 4.67p from 4.8p the earlier 12 months. And analyst forecasts don’t present earnings getting again to overlaying the dividend till 2027 — after which solely simply.
However the firm’s coverage is to pay out 7.5% of web belongings, or a minimum of £250m yearly. So it’s circuitously tied to earnings — and the stability sheet carried web money of £327m on the midway stage. Forecasts present dividends just about steady — up and down a tiny bit — over the subsequent three years.
Taylor Wimpey additionally continues to emphasize “confidence in our capital allocation coverage which prioritises stability sheet power, funding within the enterprise to assist progress throughout the cycle and a dependable dividend for shareholders“. So, cyclical ups and downs, however prioritising a gentle dividend. That’s how I learn the corporate’s longer-term outlook, and it locations it firmly amongst my picks for FTSE 100 revenue shares.
What to look at this week
We’d get an early trace Tuesday (13 January), when Persimmon can be set for a buying and selling replace, with a 4.3% dividend yield on the playing cards. That’s decrease than Taylor Wimpey’s however forecast earnings ought to cowl it comfortably sufficient over the subsequent few years. So, perhaps there’s a decrease short-term yield however extra security from Persimmon?
November’s Q3 replace from Persimmon revealed a 15% rise in ahead gross sales. And that does trace at warming sentiment within the property market. CEO Dean Finch did, although, remind us of “the present macroeconomic atmosphere and the short-term challenges dealing with our business“.
Backside line
I nonetheless anticipate financial pressures to bear on home builders for some time longer. And Taylor Wimpey’s forecast earnings failing to match the projected dividends within the subsequent couple of years do make me a bit nervous.
However I can solely see good coming from the sector in the long run. And I’m undoubtedly contemplating a Taylor Wimpey purchase — or perhaps even a Persimmon top-up. 2026 may very well be the 12 months for housebuilders.
