Is It Too Late To Add These Housebuilders To Your Income Portfolio? Bovis Homes Group Plc, Persimmon Plc, Berkeley Group Holdings Plc & Galliford Try Plc

Today, I’m looking at four housebuilders: Persimmon (LSE:PSN), Berkeley Group (LSE:BKG), Galliford Try (LSE:GFRD) and Bovis Homes (LSE:BVS).  I’ll be asking whether any of these companies are still worth buying as they hit new highs.


Here we have one of the largest listed housebuilders, with a market capitalisation of over £5 billion.  In the year-end trading statement of 7 January, the company said that it had legally completed 13,509 new homes in the year, an increase of 17%, and that the average selling price was 5% higher over the prior year.  Year-end cash balances were £378 million compared to £204 million at the end of 2013. This, I think, will enable the company to accelerate its stated capital return plan going forward, and with 95 pence pencilled in for this year, we have a yield of over 5% despite the share price trading at an all-time high.

Berkeley Group

This company reported its interim results on 5 December 2014.  They were impressive: revenue grew by 24.5% and profit after tax grew by 84.5% to £247.1 million.  On top of all this, a further interim dividend of 90 pence per share was announced in order to keep pace with its own capital return plan. Indeed, the shares currently yield just under 7%, making them the highest-yielding shares under review today.  I think that the biggest fear here is the exposure to a rather hot London housing market, which has showed signs of cooling recently.

Galliford Try

Interim results from this housebuilding and construction company set another record when they were released last week.  Revenues grew by 35% and profit before tax increased by 12%.  The interim dividend here was increased by an impressive 47% to 22 pence per share with a move to further enhance the progressive policy by taking dividend cover from 1.7 times earnings to 1.5 times by 2018, in line with the growth strategy.  The shares reacted well to the news and currently sit at their all-time high, yet still have a forward yield of almost 5%.

Bovis Homes

Results are out today and they look rather good.  Revenue has climbed by 46% to £809 million and profit before tax has climbed to £133.5 million. The full-year dividend has been increased by 159% to 35 pence per share, with the final dividend of 23 pence per share to be paid in May of this year. It has been confirmed that the dividend for 2015 will also be at least 35 pence per share, giving a forward yield of at least 3.7%, which is still worth having in the current environment of low-yielding saving accounts.

What’s My Take?

Well, we have four shares at or near their all-time highs, but still only trading on low price to earnings ratios.  They are all reporting great results, and we see a market returning to normal conditions, which I think is good news — nobody wants another bubble!  The UK needs new houses faster than they can be built, and any of these shares could complement a portfolio looking for yield and growth over the longer term, as they beat the FTSE 100 on both measures.  In the short term there may be some volatility, with the election bound to create some uncertainty in the market — but this may well offer a good entry point…  

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Dave Sullivan owns shares in Persimmon, Galliford Try and Berkeley Group Holdings. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.