Persimmon (LSE: PSN) stands out to me as an income share benefitting as the UK housing market begins to regain its footing.
Double-digit growth in completions in 2025, expanding outlets and a firmer forward‑sales position have boosted its medium‑term cash‑generation profile.
This has left analysts forecasting strong earnings growth for the firm over the medium term. That momentum should help drive its dividend yield higher over the coming years.
So, what sort of gains are we looking at here?
How much earnings growth?
A risk for Persimmon is a reversal in the recent trend of lower inflation and interest rates. This could trigger another squeeze on household finances and slow the housing market.
Nevertheless, the consensus analysts’ forecast is that its earnings will increase by an average of 16.1% a year to end-2028.This looks well-founded to me, based on the positive trend in recent results.
Its H1 2025 numbers showed underlying profit up 13% year on year to £172m. This was underpinned by a 12% rise in new‑housing revenue to £1.31bn. Adjusted operating margin edged 0.1 percentage points higher to 13.1%, well ahead of analysts’ forecasts of 12.3%. And underlying return on capital employed rose 1.2% to 11.2% over the period. These numbers followed a 4% rise in new home completions to £4.605bn in H1.
The firm’s 13 January 2026 update for full-year 2025 — issued ahead of the official results on 10 March — was also strong. New home completions climbed 12% to 11,905, while the average selling price rose 4% to £278,000. Forward sales were up 4% to £1.172bn, and it increased the number of its sales outlets to 271 from 261.
Persimmon expects to officially report underlying profit before tax at the upper end of market expectations of £415m-£440m.
How much dividend income could be made?
Analysts forecast that Persimmon’s dividends will increase to 65.9p this year, 73.3p next year, and 91p in 2028. These would generate respective yields of 4.7%, 5.2%, and 6.5% on the current £14.03 share price. This is much better than the average 3.1% yield of its home FTSE 100 index.
A company’s dividend yield can change as its share price and annual payout alter. Even so, a £20,000 holding in the firm would make £18,244 after 10 years on the projected 6.5% yield. This also includes the dividends being reinvested back into the stock to benefit from the power of ‘dividend compounding’.
Over 30 years on the same basis (which is not, of course, guaranteed), the dividends would increase to £119,836. Including the initial £20,000 investment, the holding’s value would be £139,836 by then. And this would deliver an annual dividend income of £9,039.
My investment view
Persimmon’s recent improvement in volumes, margins and forward sales gives it a firmer earnings base than it has enjoyed for several years.
With analysts expecting steady profit and dividend growth to 2028, I think the shares offer a compelling income case to investigate further at today’s valuation.
That said, my existing holding in another high-yielding builder — Taylor Wimpey — prevents me from buying it. Adding another stock from the same sector would unsettle the risk-reward balance of my portfolio.
So, I have my eye on other high-yield opportunities that can deliver major income, particularly as I look to retirement.
