Persimmon plc Vs Barratt Developments Plc Vs Taylor Wimpey plc – Which Should You Buy?

housesWith the UK housing market continuing to deliver strong gains, it is little wonder that Persimmon (LSE: PSN) has experienced a strong first half of the year. Indeed, the company this week announced that interim results would see sales up one-third as it continues to benefit from an increase in the average selling price of properties, which in Persimmon’s case was 4% higher than in the first half of 2013.

So, how does it compare to two of its sector peers, Barratt (LSE: BDEV) and Taylor Wimpey (LSE: TW)?


A key facet of Persimmon’s potential lies in its timetable of returning capital to shareholders. Indeed, the company has stated how much it intends to pay to shareholders by way of dividend each year until 2021. Of course, the amounts are not set in stone, but it seems as though management has a clear, discipline and transparent stance on the company’s finances, which is good for shareholders going forward. With shares in Persimmon currently yielding 5.9% and trading on a price to earnings (P/E) ratio of just 11.6, they could have a great future ahead of them.


Although Barratt doesn’t appear to be as attractive as Persimmon in terms of its yield or valuation, it still has a significant amount of long-term potential. For instance, earnings per share (EPS) are forecast to increase by up to 40% over the next year as the company continues to recover from the challenges posed by the credit crunch. This means that, although Barratt currently trades on a P/E of around 13.1, its price to earnings growth (PEG) ratio is just 0.3, which is very attractive and shows that shares could perform well over the medium to long term.

Taylor Wimpey

Although sector peer, Taylor Wimpey, currently yields just 2.1%, this is set to change in 2015 when the company is forecast to triple dividends per share. This could mean that shares yield as much as 6.2% in 2015, which would clearly make them highly attractive for income-seeking investors. In addition, Taylor Wimpey looks set to follow its sector peers and take advantage of a booming UK property market, with EPS forecast to increase by 33% next year. Trading on a P/E of just 11.4, Taylor Wimpey (as well as Persimmon and Barratt) looks to have great potential over the medium to long term.

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Peter owns shares in Taylor Wimpey.