Looking for the best passive income stocks to buy next month? Here’s one to consider that I think could be an excellent source of long-term dividends.
For 2025, its dividend yield is more than double the FTSE 100 forward average of 3.5%.
8.4% dividend yield
A sluggish economy continues to cast a cloud over the housing market. There’s also ongoing uncertainty over future interest rates amid a recent pickup in inflation.
Yet homebuyer activity remains resilient, suggesting Taylor Wimpey (LSE:TW.) could be a strong pick for dividend investors to consider.
City analysts expect the full-year dividend to rise 1% in 2025, to 9.56p per share. Following recent share price weakness, this means the dividend yield on Taylor Wimpey shares is an enormous 8.4%.
Dividend risk
There is some risk to current dividend forecasts, having said that.
The expected payout for this year is higher than predicted earnings of 9.13p, leaving the builder to rely on its balance sheet and hope that the housing market recovery doesn’t fizzle out.
On the plus side, Taylor Wimpey has a tonne of cash on its books to help it meet dividend projections. Net cash was £564.8m as of December.
What’s more, latest housing market data remains highly encouraging.
According to Nationwide, average UK property prices rose 0.4% month on month in January, to £270,493. This was up from growth of 0.1% in December.
On an annual basis, prices were up 3.9% last month.
Strong update
Latest trading data from Taylor Wimpey itself is also pretty reassuring. The Footsie firm said on Thursday (27 February) that net private sales rate between 1 January and 23 February was 0.75 per sales outlet per week, up 12% year on year.
Meanwhile, its total order book (excluding joint ventures) rose to £2.3bn, comprising some 8,021 homes. This compares with £1.9bn and 7,402 respectively at the same point in 2024.
A robust level of orders means Taylor Wimpey expects to record between 10,400 and 10,800 completions, excluding joint ventures, in 2025. That’s up from 9,972 last year.
According to analyst Andy Murphy of Edison: “The company’s robust balance sheet, increased land approvals, and streamlined planning pipeline position it for volume growth in 2025, even as mortgage affordability and build cost pressures remain key factors to monitor.”
A long-term buy?
Even despite the near-term risks, I think Taylor Wimpey is an attractive passive income stock to consider. And it’s not just because of that 8%-plus dividend yield.
I’m expecting the business to perform strongly over a longer time horizon as population growth drives housing demand. Government plans to build 1.5m new homes between 2024 and 2029 — faciliated by a bonfire of planning regulations for homebuilders — will give housebuilders added scope to ramp up profits growth.
Taylor Wimpey’s deep land bank puts in a strong position to exploit this opportunity too. It owned roughly 136,000 plots as of the end of 2024, after the company added a further 12,000 over the course of the last year.
While it’s not without risk, I think Taylor Wimpey’s a great stock to consider for long-term dividend income.
