The Taylor Wimpey share price is up 50% in a year – I think it’s got further to go

The Taylor Wimpey share price has exceeded expectations since Harvey Jones bought the stock last year. It offers fantastic dividends too.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

The Taylor Wimpey (LSE: TW) share price has been going gangbusters, it’s up a staggering 53.71% over the last year. I’d expect that kind of return from a FTSE 250 growth stock, rather than a FTSE 100 housebuilder in the middle of a cost-of-living crisis.

Created with Highcharts 11.4.3Taylor Wimpey Plc PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.co.uk

That’s good news for me, because I bought Taylor Wimpey shares on three different occasions last autumn, at an average price of 123.66p. Today, I’d have to pay 151.60p. I’ve also received two dividends, and reinvested both. Taylor Wimpey shares have much further to go, in my view. I’m not the only one who thinks that.

FTSE 100 growth hero

The shares jumped when Labour won the election, as markets expect the firm will be a key beneficiary of chancellor Rachel Reeves’ push to build more homes. Yet I think investors have slightly got ahead of themselves.

Should you invest £1,000 in Tesco right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Tesco made the list?

See the 6 stocks

Taylor Wimpey has warned it will struggle to complete 10,000 homes this year. That’s down from 14,154 in 2022 and 10,848 in 2023. It will need some big incentives to turn that around in a hurry. Especially if it hopes to maintain build quality.

Also, while PM Keir Starmer has pledged to “bulldoze through” planning reforms, change won’t happen overnight.

High interest rates, the rising cost of labour and materials, and the slowing economy have left their mark on Taylor Wimpey. Its return on equity has plunged. Let’s see what the charts say.


Chart by TradingView

There’s a danger the share price has raced ahead of fundamentals. I bought Taylor Wimpey at a valuation of around six or seven times earnings. Today, it’s valued at 15.22 times. So it’s not the bargain it was.

Solid dividend income

While the yield has retreated from the blockbuster 9.25% we saw in December 2022, it still looks pretty solid. Let’s look at another chart.


Chart by TradingView

Markets are forecasting income of 6.11% in 2024 and 6.25% in 2025. While marginally lower, at least it’s slowly climbing. The board has pledged to maintain dividends at every stage of the house market cycle, and return around 7.5% of net assets to shareholders annually, worth at least £250m a year. With £837m in net cash, today’s high yield looks sustainable.

When interest rates finally start falling, savings rates and bond yields will follow. With luck, Taylor Wimpey dividends will continue to rise, making the stock look even more attractive and drawing in new investors.

Naturally, there are risks. Interest rates may not fall as much as we would like. Taylor Wimpey may struggle to boost completions, with labour in short supply. If Starmer does manage to get 1.5m homes built in five years, increased supply could hit prices.

Obviously, the ideal time to buy Taylor Wimpey shares was a year ago. But I think today is pretty tempting too. The only thing stopping me from buying more is that I already have a big chunk of my pension tied up in this stock.

But there are other promising opportunities in the stock market right now. In fact, here are:

5 stocks for trying to build wealth after 50

The cost of living crisis shows no signs of slowing… the conflict in the Middle East and Ukraine shows no sign of resolution, while the global economy could be teetering on the brink of recession.

Whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times. Yet despite the stock market’s recent gains, we think many shares still trade at a discount to their true value.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

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.

Harvey Jones has positions in Taylor Wimpey 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.

More on Investing Articles

US Stock

Apple stock is close to 52-week lows. Should I snap it up now?

Jon Smith discusses the double-digit percentage fall in Apple stock last week and weighs up whether now's the time to…

Read more »

Investing For Beginners

2 FTSE 100 gems that rallied last week as the stock market tumbled

Jon Smith flags up a couple of FTSE 100 shares that actually jumped at a time when most of the…

Read more »

Investing Articles

Glencore’s share price is 53% off its 52-week highs. Is it time to consider buying?

Glencore’s share price has tanked due to concerns over an economic slowdown. Is this an amazing buying opportunity for long-term…

Read more »

Investing Articles

Forecast: in 1 year, the Marks and Spencer share price could be…

The Marks and Spencer share price has hit its highest point since 2016 after more than doubling under the new…

Read more »

Hand of person putting wood cube block with word VALUE on wooden table
Investing Articles

Down 34%, does IAG’s share price look an unmissable bargain to me now?

IAG’s share price had fallen a long way even before the latest market rout, but this may mean a bargain-basement…

Read more »

Investing Articles

Forecast: in 1 year, the HSBC share price could be…

The HSBC share price is approaching a 20-year high under its new CEO as he targets $1.5bn of savings. Here…

Read more »

Investing Articles

Forecast: in 1 year, the Barclays share price could be…

Barclays’ share price has more than tripled in the last five years as higher interest rates push up margins. But…

Read more »

Investing Articles

This FTSE 100 heavyweight’s yield is forecast to rise to 8% by 2027 and it looks 60%+ undervalued to me too!

This FTSE financial gem looks very undervalued to me and its yield is projected to rise to well over my…

Read more »