Investing in Taylor Wimpey (LSE: TW) shares has been a bruising experience lately. Like every other UK housebuilder, they’ve taken a real hammering. And not just during the Iran conflict. They’ve been under the cosh for a decade. Yet on Friday (17 April) we got a happy moment of respite. Can it continue?
Let’s not get carried away. Shares in the FTSE 250 firm trade at roughly half their value of a full decade ago. That’s a rotten performance, although their struggles are one of the reasons I added them to my SIPP in 2023. The shares looked incredibly cheap, while the dividend yield was irresistible. I decided that once the economy picked up, the Taylor Wimpey share price would follow. Unfortunately, things got worse instead.
The housebuilders seem to be the whipping boys in every crisis. Whether it’s Brexit, the pandemic, the Ukraine war or the cost-of-living crisis, the sector takes a beating. Building houses is slow and costly, especially in the UK, and nobody knows what demand will be like at the end of it.
Ups and downs
Taylor Wimpey and the rest benefited from years of low interest rates, and got further support from the government-backed Help to Buy scheme. That was axed in 2023 The cladding fire safety scandal cost the sector a fortune.
Everything looked nicely set for 2026, with inflation and interest rates destined to fall, and the UK economy potentially picking up. Then came Iran. The oil price spike looks destined to drive up interest rates and energy costs, while spooking buyers.
The Taylor Wimpey share price duly plunged. Yet on Friday, US President Donald Trump gave investors the news they were hoping for, by saying the crucial Strait of Hormuz shipping lane was open. Share prices rallied across the board, with one or two exceptions, such as the big oil giants. Taylor Wimpey rallied too, although I had much bigger one-day winners in my portfolio.
Taylor Wimpey shares closed 3.17% higher on the day. If somebody had £15,000 in the stock, they’d have ended Friday £475 better off. But investors who think they’ve missed a bargain buying opportunity shouldn’t fret too much. The shares are still down 22% over 12 months, and almost 55% over five years. And whether the events around the Strait over the weekend will send prices down again on Monday remains to be seen.
At The Motley Fool, we only suggest investing for the long term. One day’s performance, however good, is neither here nor there. Friday’s rally could well unwind on Monday. Taylor Wimpey shares look good value with a long-term view, as the price-to-earnings ratio is a modest 10.6. The trailing dividend yield is stunning at 10.77%, but don’t be misled. The board has cut the dividend a couple of times lately, and the forward yield for 2026 is 8.35%. Still pretty good though.
I think the shares are worth considering at today’s price, but investors must approach with caution. The shares could go anywhere in the short run. Over the years, Taylor Wimpey could prove a brilliant bargain, but patience and strong nerves are required. I can see lower-risk recovery plays out there today, both on the FTSE 100 and FTSE 250.
