A supply-demand imbalance in new home construction and a good mortgage environment for consumers are the ideal conditions for housebuilders such as Taylor Wimpey (TW). Factor in an 11.5 per cent increase in the average price of the 12,454 homes the company sold in 2014 - which was 6.5 per cent more than it sold in 2013 - and it's not hard to understand the 54 per cent increase in operating profits.
That has allowed Taylor Wimpey to double its regular dividends to 2 per cent of net assets, while also pursuing a policy of returning extra cash to shareholders through special dividends. A 7.68p-a-share special payout is scheduled for July - significantly up on last year's 1.54p return.
With 75,000 plots - about six years' worth of supply - the company has also reached what management deems an optimum land bank size. Moving into a land replacement phase should lower investment spending, further boosting the cash pile. The land market is not overheating, so Taylor Wimpey has been able to buy at prices consistent with its 20 per cent operating margin target.
Analysts at JPMorgan Cazenove forecast pre-tax profits of £581m for 2015, giving adjusted EPS of 14.4p.
| TAYLOR WIMPEY (TW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 147p | MARKET VALUE: | £4.8bn | |
| TOUCH: | 147.4-147.6p | 12-MONTH HIGH / LOW: | 150p | 100p |
| DIVIDEND YIELD: | 1.1% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 78p | NET CASH: | £113m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2010 | 2.60 | -0.1 | 8.1 | nil |
| 2011 | 1.81 | 78.6 | 1.8 | 0.38 |
| 2012 | 2.02 | 204 | 7.2 | 0.62 |
| 2013 | 2.30 | 306 | 7.5 | 0.69* |
| 2014 | 2.69 | 469 | 11.6 | 1.56* |
| % change | +17 | +53 | +55 | +126 |
Ex-div: 8 Apr Payment: 20 May *Excludes special dividends of 1.54p a share for 2013 and 7.68p a share for 2014 | ||||
