Taylor Wimpey Dividend: Dates, Forecasts, and Analysis

With the British government seeking to build 1.5 million new homes by 2029, Taylor Wimpey (LSE:TW.) and its dividend could be set for a terrific boost. With British housing still in short supply and interest rates falling, the demand cycle is ramping back up, creating a potentially powerful tailwind for the firm’s cash flow and, in turn, shareholder rewards.

So, let’s explore when this homebuilder stock pays its dividend, where it could grow in the future, and what risks shareholders are exposed to.

When does Taylor Wimpey pay dividends?

Taylor Wimpey pays dividends to shareholders twice per year. While the exact dates tend to vary slightly, shareholders on the record during the start of April and October are eligible to receive dividends, which are typically paid one month later.

In 2024, the record date for the first dividend was 2 April, which was later paid to shareholders on 10 May. Similarly, the second dividend record date was 11 October, which was then paid on 15 November.

Despite appearances, the first dividend payment of each year is actually the final dividend payment of Taylor Wimpey’s previous fiscal year. That also means the second payment in November is actually the first interim dividend of the next fiscal year.

In 2024, that means that the dividends paid in May were actually the final dividend of 2023, and the November payment is the interim dividend of 2024. Therefore, the final dividend of 2024 will be paid in May 2025.

What is the dividend payout ratio for Taylor Wimpey

Looking at the latest full-year results for 2023, Taylor Wimpey had paid a total ordinary dividend of 9.58p per share. Over the same period, the homebuilder generated a net income of 9.9p per share.

Therefore, Taylor Wimpey has a payout ratio of approximately 96%. This means the homebuilder has returned almost all of its profits to shareholders in 2023. This is exceptionally high and is typically a sign of unsustainability.

However, it’s important to remember that the homebuilder operates in a cyclical industry. When market conditions suffer, so do earnings. With rising inflation and interest rates, Taylor Wimpey’s earnings have been slashed in half compared to the 19.8p per share generated in 2022. And when paired with a 9.4p dividend per share over the same period, the homebuilder’s payout ratio has increased significantly from 47%.

Management appears to have maintained shareholder payouts despite the fall in earnings, suggesting that it expects the headwinds facing the business to only be temporary. This is likely something potential investors and shareholders need to investigate further.

Nevertheless, comparing the firm’s current payout to its share price of 122p reveals that Tayor Wimpey shares offer a fairly substantial 7.9% dividend yield. However, should shareholder payouts or the share price change, this yield could move up or down in the future.

Taylor Wimpey’s dividend history

Taylor Wimpey has a long track record of paying and growing dividends. Over the last 10 years, the homebuilder has increased shareholder payouts by an impressive average of 29.7% per year. However, over the last five years, this growth has slowed significantly, climbing by only 4.7% annually.

Like many other companies exposed to the real estate market during the 2008 financial crisis, dividend payments were cancelled for several years. And even today, on a per-share basis, shareholder rewards have yet to recover to 2007 levels.

What is the Taylor Wimpey dividend forecast for 2024, 2025

The British government is simplifying the planning permission process. That means the regulatory environment for homebuilding companies like Taylor Wimpey is becoming friendlier, allowing the firm to more easily convert its landbank into properties for sale.

However, market conditions today are very different compared to a few years ago. 2023 marked the end of the 10-year Help-to-Buy scheme. Interest rates are no longer close to 0%. At the same time, the government’s latest budget offered support on the supply side of the housing equation but no stimulus for the demand side.

Pairing all this with continued short-term uncertainty, analysts are not expecting significant growth for 2024 and 2025.

Homebuilders are exposed to a lot of external influences like macroeconomic factors. As such, these forecasts may prove inaccurate should market conditions worsen or similarly improve more than expected. Therefore, investors must consider both the risks and potential rewards.

What are the risks of investing in Taylor Wimpey?

As previously mentioned, Taylor Wimpey, like most homebuilders, has a lot of external influencing factors. Given that constructing homes uses a lot of raw materials such as wood, metal, and concrete, profit margins are subject to the risk of fluctuating commodity prices.

Home affordability is also largely driven by mortgage rates and economic growth. During recessions, home buying activity tends to drop significantly, adversely impacting earnings and cash flow. Shareholders have experienced this first-hand in 2023, with earnings being essentially slashed in half.

To navigate down cycles in the market, management keeps a significant chunk of cash on its balance sheet. This provides ample liquidity for short-term speed bumps. However, protracted economic downturns can be severe for Taylor Wimpey. Cash reserves only last so long, and if there’s a sudden need for additional capital, the firm may be forced to sell newly built homes at a discount or even potentially at a loss, depending on the material costs.

Which homebuilder stock pays the highest dividend?

Taylor Wimpey is not the only homebuilding business on the London Stock Exchange. However, with other companies cutting their dividend payouts due to falling earnings and Taylor Wimpey maintaining it, the firm currently offers the highest dividend yield.