Shares I love: Taylor Wimpey

Harvey Jones is a huge admirer of Taylor Wimpey shares and so far he has been handsomely rewarded for buying them. He thinks this relationship will last the course.

| 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.

I love my Taylor Wimpey (LSE: TW) shares. There, I’ve said it. Don’t get me wrong. This isn’t a wild, stormy, amorous love. I’m not head over heels. But things have gone swimmingly since I committed to them last year.

Sometimes a stock just clicks. That was the case with the Taylor Wimpey share price. The more I examined it last year, the better it looked.

The shares seemed great value when I swooped, trading at around six times earnings. That was way below the average FTSE 100 valuation, which was closer to 15 times. I felt that gave them bags of growth potential, once the market mood picked up.

Should you invest £1,000 in Scottish Mortgage 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 Scottish Mortgage made the list?

See the 6 stocks

I heart Taylor Wimpey

They also offered a dizzying forecast yield of more than 7% a year. I simply couldn’t resist and bought Taylor Wimpey shares not once but twice in September last year, and once again in October.

Taylor Wimpey seemed the reliable type. The board clearly states that it will pay a dividend “throughout all stages of the housing cycle”. It aims to return around 7.5% of net assets to shareholders annually. I’m hoping to receive dividends through better and worse, in sickness and in health, and all that.

And that’s not all. Taylor Wimpey may also make “additional significant surplus cash returns to be made at appropriate times in the cycle”.

I invested £4,000 in total (wish I’d bought more!) and received my first dividend of £80 last November and another £158 in May. Naturally, I reinvested both straight back into Taylor Wimpey shares. No playing away here.

My next dividend is due on 15 November. I’ll get 4.8p for each share. Since I hold 3,425, it’ll be worth another £165. I do have one concern, though. The forecast yield remains attractive at 5.7% but earnings cover is down to 0.9. I hope that won’t be an issue as a earnings pick up, but there are no guarantees.

A long-term FTSE 100 relationship

The Taylor Wimpey share price has had a solid year, climbing 36.49% against an average return of 9.57% on the index as a whole.

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

My original £4k is now worth £5,619. That’s a total return of more than 40% in roughly a year.

When I buy FTSE 100 shares, I’m not after a quick fling. I aim to stand by them for years, decades, possibly even for life.

I know there will be ups and downs. Taylor Wimpey shares aren’t as cheap as when I bought them, now trading at 16.59 times earnings. This suggests growth may slow. That’s fine. I can’t expect another 40% total return over next year.

I suspect Labour’s planned housebuilding splurge may fall short, which could hit optimism in the sector. If the economy stutters, inflation proves sticky, and interest rate cuts slow, Taylor Wimpey could go through a rough patch. Every relationship does.

Yet I reckon this one could last the course. Crucially, Taylor Wimpey gives me the wow factor every successful, long-term relationship needs. A solid balance sheet. Love it.

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

Warren Buffett at a Berkshire Hathaway AGM
Investing Articles

Dividend investors! Here’s what Warren Buffett says builds wealth in the stock market

Reinvesting dividends at yields of 8% or higher looks like a good way of building wealth. But Warren Buffett has…

Read more »

Calendar showing the date of 5th April on desk in a house
Investing Articles

Here’s my Stocks and Shares ISA plan for 2025-26

A Stocks and Shares ISA helps investors avoid taxes on dividends and capital gains. And Stephen Wright has a plan…

Read more »

Dividend Shares

Of the 20 highest-yielding FTSE 100 stocks, this is my top pick

This FTSE 100 stock currently offers a yield of 6.4%. But Edward Sheldon believes it’s capable of providing share price…

Read more »

Investing Articles

Could Tesla’s share price jump over the next 12 months? These analysts think so!

Tesla's share price has fallen by almost a third since 1 January. But optimism is high that Elon Musk's company…

Read more »

Investing Articles

I asked ChatGPT where the FTSE 100 will be in 6 months: here’s what it said…

Let’s be realistic, ChatGPT can’t predict the future. But it did do a good job of compiling data from brokerages…

Read more »

Investing Articles

Could the Rolls-Royce share price hit £10?

The Rolls-Royce share price has taken most analysts by surprise with almost everything going right for the British engineering giant.

Read more »

Investing Articles

4 REITs Fools own for passive income

REITs often have higher-than-average dividend yields compared to other stocks, making them a solid choice to consider for passive income…

Read more »

artificial intelligence investing algorithms
Investing Articles

Up 272% in just a year, is Palantir stock just getting started?

This writer recognises that Palantir has grown its business very well -- but does the stock price offer him an…

Read more »