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I’d happily buy this 5.5% yield in an ISA and hold it for 10 years

Of the many brilliant big-yielding shares that UK investors can buy today, Vistry Group (LSE: VTY) is one that I’d happily load up on right now.

It remains to be seen whether the ‘Boris Bounce’ that has boosted property transactions since mid-December will last given ongoing Brexit uncertainty. Regardless, I reckon the housebuilders like Vistry should continue to make progress in 2020 and beyond.

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Formerly known as Bovis Homes, trading at the FTSE 250 firm remained strong throughout the last year. The positive contribution of cheap loans and the government’s Help To Buy purchase scheme helped the company post record profits last year. 

Business has been so strong, in fact, that Vistry said profits would sail past market expectations. It witnessed what it described as a “significant step up” in average weekly sales rates, to 0.58 from 0.5 in 2018. But of course, it’s not the only housebuilder to have released blockbuster trading numbers in recent weeks.

Building things up

It’s no wonder that these construction colossi are making big plans to turbocharge production rates. Indeed, latest industry data underlined the strength of appetite for Vistry and its peers to capitalise on this fertile environment.

According to the National House Building Council (NHBC), some 161,022 homes were registered to be built in Britain in 2019. This was up 1% from the previous year and was the highest level since 2007. The news is significant because NHBC new home registrations account for four-fifths of all homes created in the UK.

Vistry certainly has plans to light a fire under build rates in the short-to-medium term. The acquisition of Linden Homes from Galliford Try, completed at the turn of the year, gives it the capacity to build a whopping 12,000 homes per year.

Another top trader

Latest trading numbers just released from Vistry’s FTSE 250 peer Redrow illustrate the strength of the market too. While its total order book was flat at around £1.2bn as of December, the value of its private net reservations on its books soared 18% year-on-year to £936m.

Moreover, it said that trading has been “resilient” in the first five weeks of 2020. The value of its reservations rose 15% at £180m, it added.

Stunning value, big dividends

Given recent news flow, it’s understandable that City brokers remain quite upbeat over the robustness of the industry. It also explains why they have been upgrading their forecasts over recent weeks again. Expectations that 2020 earnings will rise by mid-single-digit percentages at the tail end of last year have given way to predictions that profits will boom 23% this year.

Improved sentiment towards Vistry has shoved its share price 17% higher in the past month alone. And the high chance of more upgrades to broker estimates means that more gains could be in the offing. Combine this with a cheap forward P/E ratio of 10.6 times and smashing 5.5% dividend yield and I reckon the business is a top buy right now.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Redrow. 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.