The Motley Fool

I’d buy this 11%-yielding FTSE 250 dividend stock before the market comes to its senses

Image source: Getty Images.

Bovis Homes Group (LSE: BVS) saw its share price collapse a shocking 22% in 2018. I’ve said time and again that the market is far too pessimistic over the profits outlook for the homebuilders. There’s plenty of evidence surrounding the health of the homes market that has instead reinforced my positive view of the builders, and two pieces of news in recent weeks underline why I think the future remains extremely bright for these construction stars.

Exhibit A

Brexit may be playing havoc with much of the construction industry, but concerns over the manner of European Union withdrawal hasn’t prompted Bovis and its peers to pull up the drawbridge. Latest data from the National House Building Council (NHBC) showed that 15,155 new homes were registered for construction in November, up 2% year-on-year and the second-highest figure for 2018.

5G is here – and shares of this ‘sleeping giant’ could be a great way for you to potentially profit!

According to one leading industry firm, the 5G boom could create a global industry worth US$12.3 TRILLION out of thin air…

And if you click here we’ll show you something that could be key to unlocking 5G’s full potential...

And on a rolling quarterly basis, between September and November 43,745 new homes were registered to be built versus the comparable period in 2017, an annual increase of 7%.

Let’s make no bones about it: even if Britain embarks on a disorderly European exit in the next couple of months, and broad homebuyer confidence takes a whack in response, there are still unlikely to be enough homes to go around. And that’s why the builders feel confident enough to keep bumping up production.

Exhibit B

The failure of government to get on building was laid bare by a fresh report by the Center for Policy Studies which predicted that an average of 130,000 new properties per year will be built between 2010 and 2019, the lowest rate of new homes put up each year since the Second World War.

In the prior decade, some 147,000 homes were built on average each year, with 150,000 built annually in the 1990s, and the anticipated quantity of new-builds per year for the 2010s look set to be half of the level recorded in the 1960s and 1970s.

To put this in context, during the 1960s, approximately one new home was built in England for every 14 people over the decade. Rampant population growth, coupled with insufficient build rates mean that, since 2010, this ratio has stretched out to one new home for every 43 individuals.

Those 11% dividend yields

In this context it’s hardly surprising that the homebuilders continue to churn out positive trading releases in spite of the ongoing Brexit saga, the latest of which was put out by Taylor Wimpey just this week.

These construction corkers have proved their resilience in trying times since the 2016 Brexit referendum, a period that has seen average home value growth slow to a stutter. Indeed, the City still sees scope for Bovis for one to continue churning out decent profits growth for some time yet, and rises of 4% and 3% are predicted for 2019 and 2020 respectively.

The FTSE 250 firm has vowed to splash out special dividends through to the next decade and beyond, and with earnings expected to keep bounding higher, the number crunchers unsurprisingly expect it to make good on this promise. Consequently Bovis carries giant yields of 10.9% for this year and 11.1% for 2020.

I believe that Bovis has what it takes to continue generating solid profits growth and gigantic dividends long into the future. At current prices it boasts a forward P/E ratio of 8.8 times, and I reckon this makes it a steal.

“This Stock Could Be Like Buying Amazon in 1997”

I'm sure you'll agree that's quite the statement from Motley Fool Co-Founder Tom Gardner.

But since our US analyst team first recommended shares in this unique tech stock back in 2016, the value has soared.

What's more, we firmly believe there's still plenty of upside in its future. In fact, even throughout the current coronavirus crisis, its performance has been beating Wall St expectations.

And right now, we're giving you a chance to discover exactly what has got our analysts all fired up about this niche industry phenomenon, in our FREE special report, A Top US Share From The Motley Fool.

Click here to claim your copy now — and we’ll tell you the name of this Top US Share… free of charge!

Royston Wild owns shares of Taylor Wimpey. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.