I purchased 3,254 Taylor Wimpey (LSE: TW) shares in 2023 at a median entry price of simply 124p and had excessive hopes for them on the time.

The FTSE 100 housebuilder had a dirt-cheap price-to-earnings (P/E) ratio of round six and a sky-high dividend yield of seven.5%.

I checked the stability sheet and it regarded sturdy. With the UK apparently bouncing again post-Covid, I felt bullish in regards to the housing market’s prospects.

Since then, it’s been something however easy crusing.

At the moment, the Taylor Wimpey share price sits at 117p, down virtually 6%. The price-of-living disaster, rising inflation and hovering mortgage charges have all stretched purchaser affordability. Inflation additionally drove up labour and materials prices, squeezing margins.

Dividends however no progress

April introduced recent ache with increased employer’s Nationwide Insurance coverage contributions and an inflation-busting improve within the minimal wage.

Taylor Wimpey’s full-year 2024 outcomes, revealed in February, confirmed the affect. Revenues dipped 3.2% to £3.4bn and working income fell 11.5% to £416.2m. The variety of houses accomplished fell barely to 10,593, with the typical promoting price dropping from £370,000 to £356,000. Over 12 months, the inventory is down 15%.

Since then, we’ve have one or two inexperienced shoots.

The corporate referred to as its 2025 begin “robust”, and on 30 April, mentioned the spring promoting season was going nicely. Taylor Wimpey is on target to hit forecast revenue steerage of £444m, which might mark a wholesome 6.7% improve on 2024.

Including to the momentum, the Financial institution of England minimize rates of interest to 4.25% yesterday. It wasn’t the deep minimize some had hoped for, but it surely’s one other step in the precise route.

This inventory has compensations

Via all of the ups and downs, Taylor Wimpey has continued paying me a beneficiant revenue. It dishes out dividends twice a yr, in Might and November, and at present it injected £154 into my self-invested private pension (SIPP).

Since November 2023, round 18 months in the past, it’s despatched me £555 in whole. Regardless of the share price dip, my authentic £4,000 stake is now price round £4,400.

Clearly, I’d hoped for extra. However dividend shares have a cushion when share costs are bumpy. Shareholder payouts preserve rolling in – though that’s not assured – even when the share price struggles.

I’ve reinvested each penny and now personal 428 additional shares on high of my authentic 3,245. I now personal 3,682 in whole.

Taylor Wimpey is pricier than it was, buying and selling on a ahead P/E of 14. However the trailing yield is a blockbuster 8.08%, one of many highest on the FTSE 100.

The 16 analysts serving up one-year share price forecasts have produced a median goal of 145.3p. If right, that’s a rise of greater than 24% from at present. Mixed with that yield, this is able to give me a complete return of greater than 30% if true.

Dangers stay. Rates of interest might not fall and affordability will stay stretched. If money flows fall, the dividend may come beneath strain. The home constructing sector has underperformed for a decade. It may very well be unstable for the subsequent decade. No person is aware of.

However proper now, I consider the dividends will ship. And in some unspecified time in the future, with luck, the share price will too.