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For the reason that world monetary disaster of 2007/09, US tech and progress shares have produced returns that different inventory markets can solely envy. Specifically, ‘boring, old-economy’ worth shares have significantly underperformed faster-growing rivals. Nonetheless, that established pattern has abruptly reversed over the previous yr, with the FTSE 100 surging in entrance of the S&P 500 index.
By how a lot has the Footsie crushed its American counterpart? Let’s discover out…
Fabulous FTSE
Over the previous 12 months, the FTSE 100 Complete Return Index — which incorporates money dividends — has surged by 24.3%. That’s one of many largest features I can recall in almost 4 a long time of investing in shares and shares.
In the meantime, the S&P 500 is up 15.5% up to now yr, however this achieve is in US {dollars}. In sterling (British kilos) phrases, the index has returned a mere 4.1% — greater than 20 proportion factors behind our home-grown hero.
Scrumptious dividends
Reviewing the record of highest-yielding FTSE 100 dividend shares, I see that my household portfolio owns 4 of the highest six shares providing hefty money returns to shareholders. All 4 occur to be monetary companies — asset managers and/or insurers — so this can be a extremely concentrated sector of our asset combine.
Therefore, maybe my spouse and I ought to department out by shopping for dividend dynamos in very totally different market sectors? One candidate that instantly springs to thoughts is FTSE 250 agency Taylor Wimpey (LSE: TW). Over one yr, this inventory has misplaced 10.1%, whereas it’s has dived 33.1% over 5 years (excluding dividends).
As I write, Taylor Wimpey shares stand at 108.35p, valuing this well-known housebuilder at simply over £3.8bn. This makes it one of many largest members of the mid-cap index, however too small for the blue-chip Footsie.
At current, this share affords a juicy dividend yield of 8.6% a yr, with the anticipated last dividend of 4.66p going ex-dividend on 26 March for cost round 8 Might. Subsequently, by shopping for this earnings share on or earlier than 25 March, I’d get this money payout.
Alas, there’s a catch with this market-beating money stream. At the moment, Taylor Wimpey’s income will not be sufficient to cowl these ongoing payouts, so it has to dip into its money reserves (of round £350m) to satisfy this outflow. In Metropolis jargon, this dividend yield just isn’t totally coated and so could also be in danger sooner or later.
After all, a lot is dependent upon the efficiency of the UK housing market in 2026 and past. Weaker house-price inflation, greater prices, and decrease margins are already a problem for Taylor Wimpey. But when rates of interest fall, then this is able to be a bonus for the enterprise.
Personally, I’d purchase this inventory at the moment, however my spouse is extra cautious. As funding legend the late Charlie Munger as soon as remarked, “The big money is not in the buying or selling, but in the waiting”. Thus, I could have to sit down tight till 5 March, when Taylor Wimpey releases its full-year outcomes for 2025. Watch this area!
