I added a week ago, as my above post suggests was a good point on my analysis. And now back up 10% since that level. To me it really seems if you rate TW as a stock then adding under 150p, seems like a solid plan. I think it will rise once dividend is announced which I am guessing is 2nd March full year results, or the 22nd April trading update.
There are whispers of a Housing Crash in April due to a few things happening on March 31st.
Furlough Ends
Rent Holiday Ends
Foreign Investor Rent Tax will be added
Stamp Duty Exemption ends
Apparently a lot of people are trying to buy houses before the deadline but it takes 3 months to get it through so we may see a sudden collapse in purchases as people who are let go will no longer be able to afford it, a mass of Tennants are kicked out and Foreign Investors pull the plug as soon as the Tax is introduced, causing a severe lack of Demand and a surplus of supply.
Thinking of adding more as the Shares will go down should that happen.
Yeah it could happen and to be honest if it goes lower then great, my average buy is still at 122p, anywhere close to that and I will load up probably. Still bulish on housing long term.
It could of course also be more bullish if Sunak extends or adds incentives to prop it all up at start of march budget.
I think Sunak propping up things is a bad thing as we end up paying more Tax down the line which may affect even what we pay on Divs in the future.
I think some companies are currently in a Zombie State and need to collapse to start again and bring in Jobs.
Completely agree, as someone who runs own business and recieves 0 govt help I thought furlough was great at start helping people but not its almost an unfair advantage as the rest of us have to burn through cash rather then get propped up and it cant go on forever. Also if housing does crash then arguably go thing if looking to buy house as the house prices increased more than the tax saving anyway recently.
Taylor Wimpey earnings on Tuesday morning. I am expecting solid figures but expect lots of money to have been spent on land too as probably a good time for them to go shopping from any struggling companies holding land. Expecting potential dividend reinstatement news.
At the risk of this being me talking to myself, I am assuming people will look here going forward so here are initial thoughts from Taylor Wimpey 2020 earnings results.
First some key bullet points from an investment perspective:
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Revenue down 35.7% and operating profit down 64.7%
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Still profitable for the year, 225.3m compared with 662.3m 2019.
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Net cash increased from 545.7m in 2019 to 719.4m in 2020.
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Adjusted EPS down 68% from 20.3p to 6.5p
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NAV of share up 9.5% from 100.5p to 110p
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Dividend reinstated with policy of 7.5% of net assets (around 8.25p on current NAV)
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Based on this 8.25p and current price of 170p it would be about 4.85% dividend, but in 2022 could be way higher see 2 points below for excess capital.
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2020 Final ordinary dividend payment in May 2021, 4.14p a share
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2022 will start to return excess capital either through special dividends or share buybacks, to be announced Feb 2022 FYR.
Profit and most results down on 2019 as expected due to less houses being built with lockdowns and covid rules. Still strong demand though and expect strong demand in 2021 and onwards. I would reckon the fact they built/sold less means there is also room to catch up profit wise on 2020 whether thats building more or just higher prices. Still very healthy business with cash in the bank and resuming dividends. Bought some land but I was partly expecting more, perhaps they have enough and keeping extra cash is more prudent in short term.
For I was toying with idea of selling TW couple months back as I got in a a great price but now I am keeping hold for now, it is not a large position and also I am not sure of many places for me to put the funds so this can now form part of my dividend pie rather than my āreboundā pie, as the dividends are at a healthy level I am happy to hold. Key things for me are dividend is back, cash is very healthy and the NAV is nicely up.
Interesting Analysis and got in quite cheaply too but only 35 shares to my name. Wish I put more in now.
Due to the dividend etc on a company like TW are you not better holding for a long period of time?
All depends on your investing strategy of course.
TW is one I looked at a long time ago and god I wish I followed my research and gut. One that got away! Mind you, Iām not mentioned the ones I didnāt invest Iām glad I didnāt in retrospect 
Yes same mine is a small position of my portfolio, I should have put more in too but oh well haha.
Yes sorry what I meant is now I am holding, I said āfor nowā but I meant until something changes in my analysis but that might be years away haha. I got some cheaper but my average entry is currently 122p so the normal dividend of 8.25p will be a 6.7% on cost, and thats not factoring in potential special dividends 2022 which could take it double digits through a position of strength not weakness like most high div yieldsā¦ So yeah for now I am happy to just leave this as a small position and let it compound itself.
My average is 116.03p which I am guessing is a 14% on Cost??
Although will probably use the Divs elsewhere.
Yours would be 7.1% on cost for the standard dividend per year 8.25p which is based on their dividend policy being 7.5% of net assets (which is about Ā£300m of 4bn assets end 2020) and therefore why the upcoming reinstated final dividend is 4.14p a share (roughly half as usually interim and final dividends per year).
But in 2022 this is expected will go up significantly due to either special dividend or share buybacks (not direct cash dividend but increases your holding).
Also if you look at dividend history in recent years (not a rule but indicative) the special dividends are often VERY generous so your current 7.1% dividend on cost (already LOVELY) could double in years with special dividend. I personally will reinvest the dividends back into TW.
Feel free to check the presentation in case my sums are wrong mainly pages 31 and 33.
Anyone in Persimmon? results out today and look solid, havenāt gone into them s much detail as TW yet as I donāt own Persimmon but they look strong too.
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Returning 235p to shareholders this year, so on current circa 2850p prices thats 8.2% dividend.
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More cash than Taylor Wimpey, but significantly less land than Taylor Wimpey.
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More profitable than Taylor Wimpey (of course adjusted for difference in size too)
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Persimmon trades at a higher premium to NAV, 2.57x NAV to Taylow Wimpey 1.53x NAV
So on the surface better year for Persimmon profit and earnings wise, but the key thing is Taylor Wimpey is much less expensive when compared to NAV, main difference is not cash as fairly comparable as % when adjusting for size of companies, but that TW has about 65%+ more land and about 50% more work in progress. So although margins are less at TW I feel that stands them in good stead in coming years.
Final bottom line, both look bloody good picks if bullish on UK housebuilders.
Not with interest rates this low and bottleneck from lockdown again. I think a further rise fuelled by the 5pc deposit mortgage guarantee. I would say a crash when interest rates rise in a year or two. Confident they willā¦with tax staying low how else can we combat inflationā¦
Everyone thinks interest rates will stay this way forever they wonāt, change will come.
I did see that mentioned on the News where 1% would essentially wipe out the Corporation Tax at 25%. (They assume 8 billion would be the amount they would get from the Tax on the top 10%)
It is crazy to think that the Tories didnāt think that one through to be honest.
Perhaps a Tax Hike is needed in order to combat the inevitable Inflation Rise.
Yeah housing is such a tricky one to know when it will rise/fall in some respects as government can just bring out a policy that supports or hinders it (generally supports). The 5% deposit guarantee is another boost to house builders though thats for sure.
As mentioned interest rises are the main issue that could sink the market/house builders but I donāt see how they can raise them by that much in next few years but we shall see. Bigger risk than owning house builder stock (assuming you dont own loads) is your own residential property as if people are 5% deposit regardless of guarantees lots may go into negative equity easily. Locking in a longer term fixed rate 3-5 years adds a cushion.
Developers must be loving it, this will only fuel overpriced new builds even more.
With recent TW results for H1 2021 the share NAV is now up to 113p so almost at your initial cost. Strong general results for TW as expected, annoyingly I had forgotten about my TW holding largely and my price alert for 2p lower than its recent lows few weeks back so would have loaded up some more in the 150p ish range. Oh well.
Totally agree, this applies to most new builds.
I know people that had new homes where doors opened into the Living room, rather than towards the wall, so they were rehung but never looks quite right, cupboard doors that had the inside handles cut off so they could close properly, guttering that had to be replaced, and waste water pipes that werenāt properly insulated and froze in the winter.
Iāvdiscovered you can hire people now to do a snag review on a new build. Itās about Ā£150 up north and weāll worth it. You then give that list to your builder to fix, before they go bust.
Anyhow I do see there is money to be made here, land is finite after all and as demand increases, prices go up.
Taylor Wimpey generally in the sub 160p region is a fairly safe bet, hitting 158p currently, 5.2% div yield on that price, ex div in week or so which would be a 2.6% payout div.
What are the headwinds, assuming mostly materials cost and whether labour shortages affect them significantly?