In a recent article I explained why Greggs, a firm whose share price has grown by more than 80% in 2019, could be about to add to these monster gains next week. But it’s not the only dividend hero that I have one eye on as we head into the next decade.
Indeed, as a shareholder of Taylor Wimpey (LSE: TW) stock, I am eagerly awaiting the release of fresh trading details on January 14. The housebuilder certainly soothed persistent fears over a market slowdown last time out in mid-November, advising that “we continued to see good demand for our homes and have built a very strong order book.” And I expect nothing less than another robust set of numbers from the Buckinghamshire company.
It said that its sales rate per outlet per week was up at 0.96 in the year to date versus 0.81 a year earlier. And a total order book of 10,433 homes as of November 10, up from 9,843 at the same point in 2018 and worth £2.7bn (versus £2.4bn previously), gave investors like me extra reasons to be confident.
Stunning share price gains
Like Greggs, the FTSE 100 firm’s share price has also ignited this year, up a meaty 43% since New Year’s Day. Investor demand really lit up following the UK’s avoidance of a no-deal Brexit in October, and then again after the Conservative Party’s general election victory this month. But as I explained recently, it’s possible that this bullishness will evaporate once the complications of trade deal negotiations with the European Union become apparent, raising doubts over new-build demand once again in the minds of many investors.
I see no reason to fear for the likes of Taylor Wimpey however, either in the near term or beyond. While it may fail to replicate the mighty share price gains of the outgoing year, thanks to ineffective government housing policy there’s no reason to expect the sunny trading releases from the homebuilders to come to a halt. And this should keep the stock moving skywards.
Lending conditions remain extremely favourable too, and are likely to remain so given the likely persistence of dovish Bank of England monetary policy entering the next decade. So one can expect bubbly demand for Taylor Wimpey product (and that of its peers) from first-time buyers to keep on booming.
Big dividends, top value
City analysts expect earnings at the Footsie company to rise fractionally in 2020, reflecting predictions of more weak home price growth. Still, current consensus leaves Taylor Wimpey trading on a rock-bottom forward P/E ratio of 9.5 times, way below the FTSE 100 broader average of 14.5 times.
Besides, what the builder lacks in terms of growth, it more than makes up for in terms of dividends, Taylor Wimpey pledging to keep the special payouts coming next year. It plans to pay a total 18.6p per share reward in 2020, which yields a mighty 9.6%. I reckon the business should keep paying big dividends beyond the coming year too, and with fresh financials just around the corner, I reckon it’s a top buy today.
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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.