Investing in high-yield UK shares is a simple but effective way of building a passive income.
By doing so, I can earn a second income stream in the form of dividends paid out by companies.
However, not all companies pay dividends in the first place and some pay more than others. This means it’s important to know what to look out for.
With that in mind, I’m sharing one of my favourite FTSE 100 dividend shares that I’d buy for my portfolio today to build a long-term passive income.
A leading UK residential developer
Founded in 2007, Taylor Wimpey (LSE:TW.) is one of the largest home construction companies in the UK.
The group has a workforce of over 5,000 people in Britain and provided employment for a further 11,100 subcontractors at various sites last year.
Taylor Wimpey operates across five divisions with 22 regional businesses at a local level across the UK. The company also has operations in Spain.
Strong results in a tough business environment
What impressed me recently was the news that the group delivered a strong financial and operational performance in 2022. That’s in spite of volatile conditions in the housing market.
Full-year revenues rose 3.2% to £4.4bn and operating profits increased from £828.6m to £923.4m. The latter represents a record figure for the FTSE 100 housebuilder.
Since group completions actually dropped from 14,302 in 2021 to 14,154 in 2022, strong results were primarily driven by higher average selling prices, which rose 4% to £313,000.
Challenges and risks
Despite a strong performance, there are certainly challenges ahead.
My main concern is the short-term impact on buying activity that could be caused by significantly higher interest rates and the rising cost of living.
Both of these factors are likely to impact customer affordability and confidence in the wider housing market.
Nevertheless, I’m a huge admirer of Taylor Wimpey’s proactive approach and strategy.
To illustrate, early decisive action from the group to increase operational efficiency and drive financial performance to protect and strengthen the business has paid off, despite unfavourable conditions.
Buying Taylor Wimpey shares for passive income
Taylor Wimpey’s dividend yield currently sits at a generous 7.8%.
That’s an appealing figure for me when looking to build a passive income stream.
Moreover, while no dividends are guaranteed, I like the fact that the group’s current policy is linked to asset value, rather than earnings.
This means that I’d be more likely to receive a base level of dividend even in a downturn.
My final verdict
All in all, with a high-quality landbank, strong balance sheet and an experienced management team, I really like the look of Taylor Wimpey shares at the moment.
If I had the cash to spare, I’d buy them in a heartbeat as part of my strategy to build a passive income stream from high-yielding UK shares.
