In January, many British investors began loading up on income stocks to capitalise on enormous dividend yields. And among the most popular included the leading UK homebuilder, Taylor Wimpey (LSE:TW.).
It’s not hard to see why investors were excited by this particular stock. The dividend yield was sitting just north of 8%. And hopes for a property sector revival were high as the Bank of England began cutting interest rates and the government began cutting the red tape surrounding planning permission.
So far, this bet has yet to pay off. But how long will shareholders have to wait to start seeing a return on their investment? And even if the share price isn’t moving much, how much passive income could investors have unlocked if they drip fed £500 each month into Taylor Wimpey shares? Let’s find out.
Crunching the numbers
Let’s start by working out how a £500 monthly investment has worked out so far. For this calculation, I’m going to assume that each investment was executed at the start of each month. And to keep things simple, I’m going to ignore dividends received along the way.
| Month | Investment | Share Price | Shares Bought | Total Shares Owned |
| January | £500 | 122.25p | 409 | 409 |
| February | £500 | 119.05p | 420 | 829 |
| March | £500 | 111.6p | 448 | 1277 |
| April | £500 | 108.3p | 462 | 1739 |
| May | £500 | 117.45p | 426 | 2164 |
| June | £500 | 116.95p | 428 | 2592 |
| July | £500 | 118.45p | 422 | 3014 |
| August | £500 | 101.1p | 495 | 3509 |
| September | £500 | 96.02p | 521 | 4029 |
| October | £500 | 104.55p | 478 | 4508 |
| November | £500 | 105.05p | 476 | 4984 |
| December | £500 | 101.2p | 494 | 5478 |
That means if someone drip fed £500 each month into this FTSE enterprise, they’d be sitting on roughly 5,478 shares today. That brings the average price paid per share to 109.53p, which is slightly ahead of where Taylor Wimpey stock currently trades.
However, looking at the latest dividend forecast for 2025, it’s also unlocked an average yield of 8.4% or £502 a year. And with institutional analysts also placing a 130.5p average share price target for the next 12 months, this investment could be about to pay off in 2026.
Bull versus bear
The government’s major planning reforms have yet to be implemented. But with various initiatives already underway, Taylor Wimpey has reported some encouraging planning-related successes. And with the Planning and Infrastructure Bill expected to receive Royal Assent before the start of 2026, more momentum could be right around the corner.
In the meantime, home completions have remained on track to land between 10,400 and 10,800 by the end of the year, translating into £424m of operating profit. While that’s only slightly ahead of 2024 levels, it might be the start of a wider sector recovery, especially as interest rate cuts are expected to reduce the cost of mortgages, improving home affordability.
Having said that, success is far from guaranteed. The Planning and Infrastructure Bill has already been delayed by around six months. And even if it does pass into law as expected later this month, there’s no guarantee that it will actually deliver on its promises.
In the meantime, inflation continues to be stubborn. That not only puts pressure on home buyers’ budgets, but also drives up the cost for Taylor Wimpey to build homes in the first place. As such, profit margins could end up getting squeezed, prolonging the recovery and possibly even causing dividends to get slashed.
So where does that leave investors? While Taylor Wimpey’s yield looks attractive, there are nonetheless still some significant risks attached to this income stock. And personally, I can’t say I’m tempted to add this risk to my income portfolio. So I’m looking elsewhere for passive income opportunities.
