I own shares in Barratt Developments (LSE: BDEV). I was tempted in by the colossal dividend yields and, as you can imagine, my love of the stock went up a notch following the release of this week’s full-year financials.
Britain’s biggest residential property builder announced that it has enjoyed a “strong start to the year supported by a positive market backdrop.” While the company’s sales rate remained flat year-on-year between July 1 and November 12, at 0.74, the total forward sales jumped 8.4% to £2.88bn.
Barratt has launched a further 79 new developments since the start of the fiscal year, it said, up from 69 in the corresponding 2016 period, from 373 outlets (up three from a year ago). The company said that it expects average outlet numbers to grow “modestly” in the full year.
Toasting the results chief executive David Thomas said: “We have started the financial year strongly with a good sales rate, driven by customer demand for new homes, and supported by an attractive lending environment.”
Watch the yield
Things continue to look good for the likes of Barratt as a lack of available existing housing drives demand for newbuild properties, which is being kept afloat by historically low interest rates and the government’s Help To Buy purchasing incentive.
And with ministers showing little real appetite to get to grips with the country’s embarrassingly-low housing stock, I expect Barratt to continue benefitting from the industry’s supply crunch long into the future.
The FTSE 100 firm forked out a total 41.7p per share dividend in the year to June 2017 (comprising interim, final and special dividends), up from 30.7p a year earlier.
And with earnings expected to rise 5% in fiscal 2018, City brokers are expecting another rise in the shareholder reward, a 43.3p payout currently anticipated. As a consequence Barratt yields a market-mashing 6.9%.
Another ‘fortune-maker’?
But Barratt isn’t the only big yielder I’m tipping to pay big now and in the future. Indeed, the favourable conditions in the car insurance market also convinces me that Hastings Group (LSE: HSTG) should keep on making its shareholders very happy.
The FTSE 250 giant saw gross written premiums boom 25% during January-September, to £714.3m, helped by the steady rise in policy costs seen across the industry. But this is only part of the story as Hastings continues to grab revenues from its competitors — the number of live policies on its books grew 14% in the nine months, to 2.6m, a result that saw its share of the market rise to 7.2% from 6.4% a year earlier.
So the City is predicting earnings at Hastings to rise 47% this year and 16% in 2018, impressive growth estimates that are expected to keep dividends tearing higher. Indeed, predicted payments of 12.8p and 15.2p per share are estimated for 2017 and 2018 respectively, meaning that the business sports jumbo yields of 4.2% and 5% for these years.
