A FTSE 100 dividend share that could soar after Labour’s general election win

A large dividend yield and predictions of growing payouts could make this FTSE 100 share a brilliant buy for long-term passive income.

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A huge Parliamentary majority means Labour has significant scope to try to deliver its manifesto pledges. WIth it, the fortunes of a great many UK growth and dividend shares could receive an enormous lift.

Kate Leaman, chief market analyst at AvaTrade, notes that “from healthcare and the environment to the economy, policy changes by the new Labour government are set to impact all aspects of life“.

She adds, too, that “with Labour’s victory, changes in the financial markets are also anticipated“.

But which UK shares could receive a substantial boost? Here’s one from the FTSE 100 that could be a big winner in the years ahead.

One possible winner

Sectors such as banking, homebuilding food and retail could witness gains due to Labour’s policies aimed at political stability, affordable housing, and encouraging private sector investments.

Kate Leaman, AvaTrade

Housebuilders like Barratt Developments (LSE:BDEV) picked up steam in the days before last week’s election.

Why? With Labour retaining its huge lead in the pre-vote polls, investors anticipated a large pick up in home construction. The red party made boosting home construction a major part of its election manifesto.

Today (8 July), Rachel Reeves — the new Chancellor of the Exchequer — affirmed the government’s plans to supercharge homebuilding, with the creation of 1.5m new homes by 2029.

To meet this goal, the government said it will reform the national planning policy framework. It has also vowed “to accelerate stalled housing sites in our country“. This is great news for the likes of Barratt, whose construction plans (and therefore profitability) have long been dogged by red tape.

Yet government pledges are never set in stone, of course. The previous Conservative adminstration also pledged 300,000 new homes a year, but was forced to ditch plans as the realities of the tough planning environment became apparent.

A similar failure by Labour could have huge negative implications for housebuilders’ earnings.

Growth returning

Having said that, the long-term outlook for the likes of Barratt remains positive, in my opinion. And that would have been the case regardless of who won the election. This is thanks to Britain’s rapidly growing population and the impact it is having on homes demand.

Higher interest rates have impacted the homebuilders more recently. But profits are tipped to snap back from this year as the Bank of England (likely) begins cutting rates.

Earnings are tipped to increase 22% in this financial year (to June 2025). And so Barratt shares are trading on a forward price-to-earnings growth (PEG) ratio of 0.7.

There’s no guarantee that interest rates will fall markedly (or even at all) from current levels. But I believe this threat to profits is baked into the housebuilder’s cheap valuation.

Any reading below one indicates that a stock is undervalued.

Rising dividends

A return to earnings growth — Barratt’s bottom-line is tipped to surge 23% in financial 2026, too — means that dividends are also expected to rise strongly following last year’s predicted cut.

As a consequence, the dividend yield on Barratt shares also rises sharply above the FTSE 100 average of 3.5%. This is shown in the table below.

Financial yearPredicted dividend (per share)Dividend yield
202415p3%
202518.9p3.7%
202623.3p4.6%

For investors seeking market-beating dividends, Barratt shares could be a great share to consider as a long-term holding.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Royston Wild has positions in Barratt Developments Plc. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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