Oh dear, I’m going to need my ISA to start generating even more passive income. That’s because — due to artificial intelligence (AI) — the end is nigh. No, not because a rogue state might use it for dubious purposes. Instead, I’ve just read that accountants are currently in what’s predicted to be the seventh fastest-declining job role over the next five years. And I’m one.
Thankfully, Derek Blair, the new president of the Institute of Chartered Accounts in England and Wales, disagrees. He says: “Rather than killing the profession, AI is likely to make it more exciting and more attractive as it frees us up from the mundane tasks to deal with more important issues.”
More exciting? And you thought accountants were dull.
A game-changer
Whatever the truth, it’s clear AI’s going to touch many aspects of our lives, including how we invest.
To try and capitalise, I have a stake in an investment trust — Landseer Global Artificial Intelligence — specialising in the sector. Cleverly, it uses the technology to help identify potential investments. Having said that, with five of the Magnificent 7 among its top 10 holdings, I’m not sure this is necessary.
As safe as houses
But if more of us are to be replaced by robots, dividend income’s going to have to also replace our salaries. Fortunately, the FTSE 100’s highest-yielding stock, Taylor Wimpey (LSE:TW.), happens to be — in my opinion — one of the least likely to be threatened by AI.
That’s because the country’s estimated to have 1.3m people on waiting lists for social housing and an overall shortage of 2.5m homes. And even though they are probably very warm, I don’t think people want to live in data centres.
Over the past few months, I’ve watched a new house being built. And while I’m sure 3D printing will make it quicker and easier to build walls, there’s no way a robot will ever be able to undertake the work that I’ve seen the electricians, plumbers and tilers do.
I reckon Taylor Wimpey’s business model’s safe for now.
Challenging times
But a lack of housing supply is only one half of the story. Unless people can afford to buy, there’s little point building more homes. Although the Bank of England has cut interest rates five times since their post-pandemic high, borrowing costs are still at historically high levels. The base rate was last at 4% in May 2004.
And before taking on a mortgage people need to have confidence that their own personal financial circumstances are reasonably secure. The UK’s most important economic indicators are giving mixed messages at the moment. This could put a housing market recovery in jeopardy or, at best, delay it further.
Reasons to be cheerful
However, I’m optimistic about Taylor Wimpey’s prospects and those for the sector as a whole. At the lower end of guidance, the group expects to sell (excluding joint ventures) 4.3% more units in 2025.
Meanwhile, adjusted operating profit is forecast to be very similar to that achieved in 2024. At 27 July, its order book was £2.19bn and it retained a net cash position. This should help underpin its generous dividend. Based on amounts declared over the past 12 months, the stock’s yielding over 9%.
On balance, I think it’s one for accountants (and others) to consider.
