Persimmon (LSE: PSN) is one of the more intriguing passive income stocks in the UK housebuilding sector to me.
It offers a solid, well‑covered dividend backed by a strong balance sheet and a business model built for cash generation once volumes normalise. Recent results suggest the worst of the cycle may be behind the company, with early signs of demand stabilising.
So, how much dividend income could investors make if that momentum continues?
Strong earnings growth projections
Analysts forecast that Persimmon’s earnings will grow a very robust 15% a year on average to end-2028. It is ultimately this that powers any firm’s dividends higher over time.
A risk here is any sustained rise in interest rates, which could cause potential home buyers to delay purchases, resulting in revenue, earnings, and home completions falling potentially short of targets. However, Persimmon’s full-year 2025 results nonetheless pointed to potentially strong earnings momentum ahead.
Revenue rose 17% year on year to £3.75bn, highlighting its ability to grow volumes and pricing even in a still‑fragile housing market. Underlying operating profit climbed 17% to £472m, illustrating the firm’s disciplined cost control and vertically-integrated model.
New home completions rose 12% to 11,905, with a 4% rise in average sales price to £278,203.
Meanwhile, the private forward sales position rose 9% to £1.25bn, which demonstrated strengthening demand heading into 2026. Indeed, Persimmon expects to deliver 12,000-12,500 completions this year. And management forecasts an underlying operating profit towards the upper end of the current £486m-£517m consensus.
Together, these trends point to a business with clear earnings momentum and a solid platform for medium‑term growth.
Rising dividend yields forecast
Persimmon has paid an annual dividend of 60p in each of the past four years. On the current share price of £11.92, this gives a dividend yield of 5% — much higher than the FTSE 100 average of 3.1%.
However, analysts forecast this payout will rise to 65p this year, 72p next year, and 77.7p in 2028. These would generate respective annual yields of 5.5%, 6%, and 6.5%.
These not only outstrip the FTSE 100 average, but also the ‘risk-free rate’ (10-year UK gilt yield). This effectively means shareholders are being compensated for taking the additional risk of share investment over no risk at all.
How much passive income?
£20,000 would buy investors 1,677 Persimmon shares, which would make £18,244 in passive income from dividends over 10 years. This assumes the 6.5% forecast as an average, although that can change over time — down or up. It also factors in the dividends being reinvested in the stock to harness the supercharging effect of ‘dividend compounding’.
After 30 years — the end of the standard investment cycle for long-term investors — this would rise to £119,836.
At that point, the total value of the holding (including the initial £20,000 stake) would be £139,836! And by then, investors would be receiving an annual passive income of £9,089!
My investment view
I already have shares in housebuilder Taylor Wimpey, so another in the same sector would unbalance my portfolio’s risk/reward ratio.
However, for investors without this problem, I think Persimmon is well worth a look. Its strong balance sheet, improving demand signals and robust medium‑term earnings projections make it a compelling option for income‑focused portfolios.
And if the housing market continues to stabilise, today’s dividend could prove the foundation for even stronger returns ahead.
