With this in mind, I think it’s possible to build a pension pot worth a cool £175,000 using a handful of dividend shares. Let me explain.

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Crunching the numbers

At an annual growth rate of 5%, someone investing £300 a month for 25 years could build a retirement pot worth £176,436. Obviously, investing more for longer is likely to yield a better return.

However, if someone was able to supplement their monthly investment with an initial lump sum of £20,000, the end result would be even more impressive. In this scenario, it would be possible to build a SIPP valued at £244,163 after 25 years. Again, this assumes a 5% return each year.

Whether an individual achieves a 5% return from growth shares — or reinvests the dividends from income stocks paying 5% — the end result will be the same.

And there are plenty of dividend-paying shares offering a similar return at the moment (19 April). The table below includes five from the FTSE 100, the UK’s premier index of listed companies.

I would have to do more research before deciding whether all of them are worth considering but, remember, this list of high-yielding shares isn’t exhaustive. There are plenty of others available at the moment.

The biggest and best?

In theory, FTSE 100 stocks are the most likely to deliver reliable earnings growth. In turn, this means their dividends are probably going to be more sustainable and predictable. Of course, there are never any guarantees when it comes to investing in the stock market. However, history suggests that the UK’s largest companies are among the world’s most reliable when it comes to dividends.

One stock in the table — and a company that has a long history of returning a large proportion of its earnings to shareholders — is Persimmon, the FTSE 100 housebuilder.

As a result of the pandemic and partly due to the impact that post-Covid construction cost inflation had on its margin, it had to cut its dividend. But based on amounts paid over the past 12 months, new investors could enjoy a yield of 5.2%.

Green shoots

Although the UK housing market has been in the doldrums lately, there are signs things are slowly recovering. The latest analysis from the Bank of England shows a steady improvement in mortgage approvals.

And until Iran was attacked, most economists were expecting the next movement in interest rates to be a downwards one. Assuming the current ceasefire in the Middle East holds, the market should continue its recovery, albeit after– perhaps — a temporary setback.

Presently, there’s a shortage of housing in the UK and recent changes to planning law should make it easier to address this under-supply. And with its houses being cheaper than most of its peers, Persimmon could be one of the biggest winners.

This should help the group expand once more and enable it to raise its dividend again. Its debt-free balance sheet also means it can use more of its operating cash to reward shareholders.

Personally, I think Persimmon’s worth considering as part of a diversified portfolio. In fact, I hold it in my own.

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However, by investing in the stock market, I reckon it’s still possible have a decent retirement, even for someone starting at 40 with nothing.

How?

Initially, I reckon it’s necessary to have a focus on growth shares. These are more likely to deliver the long-term gains necessary to build a decent investment pot.

Of course, a 6% return from a portfolio of growth shares is the same as a 6% return from a collection of income stocks (assuming the dividends are reinvested). But there are more companies that have consistently delivered share price growth of 6% a year than those whose shares are yielding 6%.

Once retirement age has been reached, I think it’s then more appropriate to have a portfolio biased towards dividend stocks. For most people in their golden years, I suspect income’s likely to be more important than capital growth. Growth shares tend to be more risky.

Don’t delay

Someone in their early 40s has to wait around 25 years before they receive the State Pension. The table below shows how an investment portfolio could grow over this period depending on how much is invested each month, assuming a 6% annual return.

A pensioner with a retirement pot of £339,790 could then earn, for example, 4.5% a year — £15,291 in cash terms — from dividend stocks. A full State Pension is currently £12,547 a year. Combined, these two income streams could give an annual income of £27,838, or £2,320 a month.

Something to consider

One dividend share I like is Persimmon (LSE:PSN). Because it has no debt on its balance sheet and it doesn’t need to spend huge amounts on capital items, it’s well placed to return the majority of its earnings to shareholders.

Indeed, a look back over the past five years shows a payout ratio of 87.5%. Just before the full impact of post-pandemic inflation was felt, the housebuilder paid dividends equal to 95% of is profit.

But we live in different times now. Facing higher construction costs and a drop in demand for new properties, the group cut its payout in 2023. This is a reminder that there can never be any guarantees when it comes to dividends.

Going in the right direction?

However, just before the conflict in the Middle East started, the group reported an improving outlook.

It’s hard to know whether recent events have fundamentally changed this assessment. However, it does appear likely that inflation is going to rise again and that interest rates will probably go up as a result. Worryingly, if the ceasefire doesn’t hold it could be a case of déjà vu and another dividend cut.

However, I’m confident that the world’s political leaders will soon see sense. Rising prices and higher interest rates are then likely to be a temporary blip.

If I’m right, Persimmon should continue its recovery. After all, there’s a chronic lack of housing in the country and the government’s keen to get Britain building again.

Coupled with its debt-free balance sheet, an abundance of land on which to build, and its 5.2% yield, I think Persimmon’s worth considering by investors today.  

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The group’s now (6 April) worth around a quarter less than when the conflict started. Does this mean it’s a bit of a bargain? Let’s take a closer look.

Double trouble

I suspect there are two potential issues playing on the minds of investors, both of which are related to inflation fears.

With the oil price continuing to rise, most economists are now predicting that interest rates will have to be increased. This is quite a turnaround. Just over a month ago, a cut was expected. And although sometimes described as a bit of a blunt instrument, the Bank of England has few levers that it can pull to combat rising inflation.

Increasing the base rate is likely to have the desired effect of slowing price rises. But it’s also probably going to reduce the demand for mortgages. In turn, this is likely to slow the sale of Persimmon’s properties. Of concern, UK gilt prices are now at levels last seen when Liz Truss was briefly Prime Minister. This matters because it’s used as the benchmark for pricing mortgages.

And if that wasn’t bad enough, rising energy prices could lead to higher construction costs. Post-pandemic inflation has already affected the housebuilder’s margin. In 2025, it reported around £28,000 less operating profit per completion than it did in 2022. This is despite being able to raise its average selling price (ASP) by nearly £30,000.

This is particularly disappointing given that the group’s financial and operating performance was starting to improve.

In 2025, it built 1,241 (11.6%) more properties than it did in 2024. And it increased its earnings per share by 9.3%. Baby steps, perhaps. But nonetheless, the green shoots of a recovery were starting to emerge.

What now?

Personally, I think the recent pullback in the group’s share price means the stock has plenty going for it. Indeed, I think it could be one to consider for patient long-term investors.

Fundamentally, the UK housing market continues to experience a shortage of properties. And the government’s emphasis on encouraging more houses to be built through a series of planning reforms can only be to Persimmon’s benefit.

Critically, the group’s ASP is lower than its FTSE 100 peers. And despite its recent troubles, the group remains debt-free. It also has a seven-year supply of plots on which to build, many of which have already secured planning permission.

The stock’s now trading around 30% below its 52-week high and around 50% lower than the consensus 12-month target of analysts.

Great for income

And then there’s the group’s dividend. Its 2025 payout of 60p means the stock’s now yielding 5.5%. And when things start to pick up, I think there’s plenty of scope to increase this further.

With no debt and limited capital expenditure requirements, the group’s historically distributed nearly all of its profit to shareholders. Last year, it adopted a more conservative approach returning around 60%.

Despite current concerns, I think Persimmon remains in good shape. I reckon it’s one of many UK shares that seem to be in bargain territory at the moment and are worth a look.

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Yet the Footsie’s drop also throws up considerable opportunities. Looking at the bigger picture, a huge number of UK blue-chip shares still appear to be on course to deliver exceptional price gains and dividends over the long haul. Snapping them up today could supercharge returns when stock markets eventually recover.

Here are just two FTSE 100 stocks I think could rebound spectacularly from current price levels.

Building back stronger?

Housebuilders like Persimmon (LSE:PSN) could be among the biggest casualties if interest rates rise. With the UK economy locked in low-growth mode, buyer affordability could take a double-whammy.

Building society Nationwide has warned that “UK economic growth is likely to be slower and inflation higher than previously expected“, with the Iran war “clouding the outlook“. No wonder Persimmon’s share price is down 26% over the last month, then.

Yet longer term, market conditions are likely to remain highly favourable for sector earnings. The government estimates at least 300,000 new homes are needed every year to house the booming population. As the UK’s second-largest builder by volume, Persimmon’s well placed to capitalise on this.

In the meantime, Persimmon’s focus on affordable housing could support earnings as buyers trade down in a tough market.

With a price-to-book (P/B) ratio of 0.9, Persimmon shares offer compelling value at today’s prices. That’s below the value watermark of one. It’s also miles below the company’s 10-year average of 1.8.

Too cheap to miss?

Babcock International (LSE:BAB) shares have fallen a sizeable 15% over the past month. Against the backdrop of an escalating war, seeing a defence stock like this reverse might be puzzling to some.

Not to me. Sure, the Middle East conflict threatens to impact supply chains and push up energy costs. But this isn’t the chief reason the company (like industry rival BAE Systems) is reversing. To my mind, it reflects Babcock’s previous huge share price gains and investors now booking profits to raise cash and/or invest in bargains.

In my view, the long-term outlook for the FTSE 100 firm remains as compelling as ever. NATO nations should continue rapidly rearming as the geopolitical landscape becomes bumpier. And especially as the President Trump fumes over other NATO nations not entering the war, raising fresh doubts over US military security in Europe. In this landscape, I expect the defense share to bounce back from its recent fall.

Babcock’s share price drop leaves the firm on a forward price-to-earnings (P/E) ratio of 18.5 times. So, once again, it looks like one of Europe’s best value defence shares — the broader P/E here remains high at 30-31. Like Persimmon, I think it’s a top FTSE 100 dip buy to consider.

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Trump’s first market meltdown was caused by ‘Liberation Day’, when new US import tariffs collapsed share prices from 2 April 2025. His second stock slide started on Monday, 1 March, following the US attack on Iran on Saturday, 27 February.

Shares slide

Investors have responded to Trump’s latest policy misstep by selling shares, bonds, gold and other assets. Over one month, the US S&P 500 index is down more than 7%, while the tech-heavy Nasdaq Composite has dropped by 7.8%. Meanwhile, the UK’s FTSE 100 index has lost 6.5% of its value in four weeks.

These and other falls have cost my family portfolio a huge sum since end-February. However, we have been unusually cautious this year, amassing a hefty amount in cash and short-term bonds. We aim to use this pot to “buy into good businesses at fair prices” — as my investment hero Warren Buffett advises.

Another great investor, Baron Nathan Rothschild, would often buy assets during very troubled times. Hence, as nervous investors sell and prices decline, I aim to buy battered shares at bargain prices.

Safe as houses?

Looking at the Footsie‘s worst performers over the past three months, I spotted one stock that my family portfolio already owns. This FTSE 100 flop is Persimmon (LSE: PSN), a leading British housebuilder.

The Persimmon share price ended 2025 at 1,358.5p, rising to peak at 1,552p on 18 February. Alas, since then it has crumbled hard, bottoming out at 1,056.67p earlier today (Monday, 30 March). As I write, it stands at 1,072.6p, valuing this construction group below £3.5bn.

After crashing 30.9% from its 2026 high, this stock appears undervalued to me. The shares now trade on under 12.2 times trailing earnings, producing an earnings yield above 8.2%. This means that their market-beating dividend yield of 5.6% a year is covered almost 1.5 times by historic earnings.

Once bitten, twice shy?

These resemble the fundamentals of a recovery play to me, but what if Persimmon turns out to be a value trap?

For the record, I’ve already been bitten by this business once, having bought this stock for our family portfolio in July 2022. We paid 1,856p a share for our current holding. Thus, we’re nursing a painful 42.2% paper loss to date. Ouch. Nevertheless, at current levels, I see these shares as an obvious bargain buy. Hence, I’ll discuss acquiring more with my wife.

That said, Persimmon’s outlook for 2026 has been clobbered by the US-Iran war. With energy prices soaring, UK inflation is set to surge. This makes it increasingly unlikely that the Bank of England can cut its base rate this year. Already, mortgage rates have jumped recently, making homes slightly less affordable. But it remains to be seen how hard this will hit UK housebuilders in 2025/26.

What other stocks and shares are moving markets right now? Read on to find out…

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It’s almost the worst FTSE 100 performer of all. But one stock has had an even tougher time of it: Barratt Redrow. Which just happens to be in the same line of business. Their shares are crashing because of events in the Middle East. But why are British builders bearing the brunt of today’s volatility?

They do seem to be on the front line of every crisis. From Brexit to Covid to the cost-of-living crisis, everybody wonders what it means for house prices. Usually, it doesn’t mean anything good, and that’s the case here.

FTSE 100 housebuilders take a beating

Companies like Persimmon are set to get squeezed from every angle. The energy shock will drive up the cost of building materials, which need transporting, and threaten supply chains too.

Buyers will be nervous about committing to a property purchase at the moment. Especially if they need a big mortgage, and haven’t arranged it yet. That could hit sales, order books, and prices. This is a huge blow because builders have spent a lot of time and money creating their product, and need a return on that investment.

The Iran crisis struck just as things were finally starting to look brighter. In January, Persimmon reported a 12% increase in completions in 2025 to 11,905, with average prices up 4%. The board reported an “encouraging” start to 2026. It was on track to achieve current market expectations of underlying profit before tax in a range of £461m to £487m in 2026. Now all that’s up in the air.

Low valuation, high yield

Markets were expecting interest rates to start falling this year, but suddenly we’re expecting them to rise. The Persimmon share price was on the up before Iran. It’s only down a relatively modest 10% over the last 12 months. But it’s down almost 65% over five years.

Some investors may read all this and decide they shouldn’t go anywhere near housebuilders today, but there are several reasons to be tempted.

Persimmon shares look cheap after their recent crash, with a forward price-to-earnings ratio of just 10.6. The forecast dividend yield is a stunning 6% for 2026, rising to 6.64% in 2027. A word of warning though. This cannot be relied upon, as current events could force a cut.

Investing is cyclical, and with Persimmon shares cheaper than they were a full decade ago, I think they’re worth considering. But as the Iran crisis drags on and the UK struggles, investors need patience and strong nerves. As with any stock today, I’d recommend drip feeding rather than going all in. We just don’t know what will happen from one day to the next. But there are some brilliant bargains out there and Persimmon looks like one of them. And I can see plenty more.

The post What on earth’s going on with the Persimmon share price? appeared first on The Motley Fool UK.

Technically, that only counts as a ‘correction,’ but I can’t help wondering: is this the first tremor before a full‑on crash?

Homebuilders hit hard

Two of the hardest‑hit names are property builders Barratt Redrow (LSE: BTRW) and Persimmon. Barratt has slipped around 30.5% in a month, while Persimmon is roughly 29.9% lower.

On the surface, that looks worrying, especially for anyone who remembers how badly the 2008 financial crisis hammered the housing market. Back then, builders and banks crashed as home prices collapsed and credit dried up. But today’s backdrop is very different.

House prices are still rising, but more slowly: the UK average stood at about £270,000 in late 2025, up around 2.4% over the previous year. That is far removed from the sharp falls seen in 2008. Builders are also dealing with higher interest rates, affordability pressures and a backlog of supply.

Altogether, the economic environment has made buyers more cautious – but are there opportunities for value investors?

What the numbers say

Barratt exhibits solid revenue growth in recent earnings, but its profits remain thin and it’s still integrating the Redrow acquisition. Extending a sharp price drop from its 52‑week high, it lost almost a third in the last month alone.

That kind of bargain appeals to value investors, but suggests markets worry about execution risk. If costs continue to rise and consumer confidence falters, there’s a real risk that profits could take a further beating.

As a cyclical stock, it’s likely to rebound hard when sentiment improves – but can also fall fast if sentiment turns. For value investors willing to endure some short-term pain for a potentially large payoff, I think it’s worth considering.

Persimmon, meanwhile, has posted stronger annual profits and a solid operating margin, with completions rising and revenue climbing to around £3.75bn.

Even so, its share price has still fallen sharply over the past year. Investors worry that the housing cycle may be peaking and that higher mortgage rates could slow demand further. If they stay high for too long, buyers may pull back, hurting profits and further pressuring share prices.

Like Barratt, the low price looks attractive but has actually outpaced earnings growth by 1.8 times. Once this improves, things could get interesting, but for now, it remains firmly on my watchlist. 

Is the UK heading for a crash?

The FTSE 100 as a whole is only a few percentage points off a correction. Still, that’s well short of what’s considered a crash (a 20%+ drop). Yes, the UK economy is slowing but inflation is easing and house prices are still rising modestly – that’s not the same picture as 2008.

Still, a sharp fall isn’t entirely ruled out. However, if the stock market does crash, it would more likely be triggered by a big external shock than by a 2008‑style housing meltdown.

For investors, the best preparation is simple: keep a diversified portfolio, avoid loading up on one sector, and ensure you have cash or safer assets to weather a downturn.

If you’re investing for the long term, a market correction can also create opportunities – just choose sensible allocations and never invest money you might need in the next few years.

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We have a war in the Middle East, oil climbing over $100 per barrel, and renewed inflation threats. Yet the Footsie is only back to early January levels. Still, I guess headlines today that said “FTSE 100 ever so slightly ahead in 2026” wouldn’t get all that many clicks.

To me it shows the resilience of UK companies, and I think it should give us confidence ahead of the 5 April ISA deadline. Oh, and maybe some second chances at picking up a few FTSE 100 stocks at nicer prices.

Correction bargains?

Even if a stock market dip is generally mild overall, it can throw up some bigger price falls for long-term investors to consider buying into. And it draws my attention to two stocks in one of my favourite sectors. It’s the housebuilding industry, and I’m looking at Persimmon (LSE: PSN) and Barratt Redrow (LSE: BTRW).

Both have fallen pretty hard, with a year-to-date 22% slide for Persimmon. Barratt Redrow is down a whopping 33% since the start of 2026.

Before I look further, one thing immediately strikes me. And it’s something I always look for when I see falls in stocks with long-term histories of cash generation. Both forecast dividend yields have been boosted by the share price drops. Analysts now have Persimmon on a forward yield of 5.6%, with Barratt’s up at 6.7%. Those are, of course, not guaranteed.

Upbeat results

With February’s first-half results, Barratt Redrow reported the completion of 7,444 homes — up 4.7% year on year. At the time, the company said it expected to complete 17,200 to 17,800 homes in the full year.

In March, Persimmon reported a 12% rise in full-year completions to 11,905 homes. And the board said to expect between 12,000 and 12,500 in 2026. The company did, perhaps ominously, say: “Assuming the conflict with Iran and its impact is short, Persimmon is set to grow again in 2026.”

FTSE 250 builder Bellway, however, saw its share price dip sharply on interim results day on 24 March. Further into the Iran war, the company warned: “The ongoing conflict in the Middle East heightens the risk of both inflationary cost pressures and an impact to customer demand, and we have already seen volatility return to the mortgage market.“

Housing crisis?

It’s looking like inflation is set to turn ugly again. And hopes of imminent interest rate cuts from the Bank of England have pretty much evaporated. Those are not good things for mortgage borrowers and housebuyers.

But if anyone sees this as a crisis for housebuilders, I think they’re dead wrong. Sure, it’s a setback. And I reckon anyone buying now could have a few squeaky months of stock market volatility ahead. But for long-term ISA investors, FTSE 100 builders have to be worth serious consideration at today’s prices.

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The FTSE 100 has fallen 10% since 27 February, which makes it a technical correction. To be called a crash, markets must fall 20%. We’re not there yet. I won’t deny it hurts. I’m not enjoying checking my SIPP and Stocks and Shares ISA. Most days, I don’t look at them.

Yet I also accept that short-term sell-offs happen all the time. We’ve see three of them lately: triggered by the pandemic, the Ukraine invasion, and Donald Trump’s ‘liberation day’ tariffs. Each time a recovery swiftly followed. Short-term volatility is the price investors pay for long-term equity outperformance. To benefit from the wealth-building ability of stocks, investors need to grit their teeth from time to time.

The FTSE 100 is volatile (again)

Before this correction, the FTSE 100 was flying, ending February just shy of 11,000, an all-time high. Today, at 9,865, it’s roughly where it was last Christmas. That’s just three months ago. Over 12 months, the blue-chip index is up more than 14%, with dividends on top. So we need some perspective.

The one big positive is that a whole heap of blue-chips stocks are suddenly trading at much more tempting valuations, and with higher prospective yields. A dozen FTSE 100 stocks have dropped almost 20% over the last month, with Persimmon, Diageo, Melrose Industries, and Barratt Redrow all down 25% or more. All four are suddenly cheaper than there were a decade ago.

Persimmon shares look cheap

Persimmon (LSE: PSM) was struggling before current geopolitical turmoil. The share price is down 4% over 12 months and 60% over five years. Some will run a mile. I see it as a cut-price buying opportunity, for investors willing to take the long-term view, and hold for at least five years and ideally longer.

The UK housing market has been hammered by affordability issues, post-pandemic inflation, rising interest and mortgage rates, and the property cladding scandal. The rising price of labour and materials added to the squeeze. As did the employer’s National Insurance hike, and two inflation-busting minimum wage increases. The end of the Help-to-Buy scheme didn’t help.

Despite all that, Persimmon started 2026 brightly, with full-year results (13 January) showing completions up 12% and a robust order book. The board anticipated underlying profit of between £415m and to £440m. It also anticipated falling mortgage rates (didn’t we all!), but that’s not going to happen now.

Following the latest dip, its price-to-earnings ratio has fallen to a modest 11. The forecast dividend yield for 2026 is a juicy 5.64%. However, if the current crisis drags on, shareholder payouts could come under pressure.

I think it’s worth considering but given today’s uncertainty, I’d advise investors drip-feed money into this or any other stock that grabs the eye. As we saw yesterday (23 March), the market can rebound quickly, but prices could just as easily fall further. Patient, gradual buying is the safest approach. Don’t wait forever though, there are plenty more bargains out there.

The post Stock market correction: a once-in-a-decade opportunity to get rich? appeared first on The Motley Fool UK.

It offers a solid, well‑covered dividend backed by a strong balance sheet and a business model built for cash generation once volumes normalise. Recent results suggest the worst of the cycle may be behind the company, with early signs of demand stabilising.

So, how much dividend income could investors make if that momentum continues?

Strong earnings growth projections

Analysts forecast that Persimmon’s earnings will grow a very robust 15% a year on average to end-2028. It is ultimately this that powers any firm’s dividends higher over time.

A risk here is any sustained rise in interest rates, which could cause potential home buyers to delay purchases, resulting in revenue, earnings, and home completions falling potentially short of targets. However, Persimmon’s full-year 2025 results nonetheless pointed to potentially strong earnings momentum ahead.

Revenue rose 17% year on year to £3.75bn, highlighting its ability to grow volumes and pricing even in a still‑fragile housing market. Underlying operating profit climbed 17% to £472m, illustrating the firm’s disciplined cost control and vertically-integrated model.

New home completions rose 12% to 11,905, with a 4% rise in average sales price to £278,203.

Meanwhile, the private forward sales position rose 9% to £1.25bn, which demonstrated strengthening demand heading into 2026. Indeed, Persimmon expects to deliver 12,000-12,500 completions this year. And management forecasts an underlying operating profit towards the upper end of the current £486m-£517m consensus.

Together, these trends point to a business with clear earnings momentum and a solid platform for medium‑term growth.

Rising dividend yields forecast

Persimmon has paid an annual dividend of 60p in each of the past four years. On the current share price of £11.92, this gives a dividend yield of 5% — much higher than the FTSE 100 average of 3.1%.

However, analysts forecast this payout will rise to 65p this year, 72p next year, and 77.7p in 2028. These would generate respective annual yields of 5.5%, 6%, and 6.5%.

These not only outstrip the FTSE 100 average, but also the ‘risk-free rate’ (10-year UK gilt yield). This effectively means shareholders are being compensated for taking the additional risk of share investment over no risk at all.

How much passive income?

£20,000 would buy investors 1,677 Persimmon shares, which would make £18,244 in passive income from dividends over 10 years. This assumes the 6.5% forecast as an average, although that can change over time — down or up. It also factors in the dividends being reinvested in the stock to harness the supercharging effect of ‘dividend compounding’.

After 30 years — the end of the standard investment cycle for long-term investors — this would rise to £119,836.

At that point, the total value of the holding (including the initial £20,000 stake) would be £139,836! And by then, investors would be receiving an annual passive income of £9,089!

My investment view

I already have shares in housebuilder Taylor Wimpey, so another in the same sector would unbalance my portfolio’s risk/reward ratio.

However, for investors without this problem, I think Persimmon is well worth a look. Its strong balance sheet, improving demand signals and robust medium‑term earnings projections make it a compelling option for income‑focused portfolios.

And if the housing market continues to stabilise, today’s dividend could prove the foundation for even stronger returns ahead.

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