Shares in Taylor Wimpey (LON:TW) have achieved a new ‘pandemic high’, as we like to call it here, and are currently trading at close to their recent 52 week high at 182.75p at time of writing.
Bullishness around Taylor Wimpey stock has been picking up sharply since early November, when the shares were priced at close to the 100p mark, but investor sentiment has been getting increasingly positive since then. Canaccord recently reiterated a buy for the stock with a target price of 193p.
Investors are getting back into leading house builders
Latest data from AI and machine learning specialist Irithmics, shared with The Armchair Trader this week, confirms our suspicion that investors are getting back into house building and stocks. There may still be scepticism around the prospects for the commercial property sector in the UK, but when it comes to residential, large investors like fund managers are feeling more positive about Taylor Wimpey, according to Irithmics.
The UK house building sector was supported by the recent UK budget, which extended the stamp duty holiday to 30 June and the nil rate band to £250,000 to the end of September. In addition government mortgage guarantees on 95% of loans are also back.
Investors are more bullish on Taylor Wimpey on the long term picture, slightly less so on the short term, but overall sentiment is very positive.
Appetite for the stock is not as strong as for some other FTSE leaders, like BP and Rolls Royce, and investors seem more likely to pick up Taylor Wimpey stock for the longer term than a short term punt. There still remains a degree of caution around UK house building, we think almost entirely driven by the vaccine and a lack of clarity on what the UK economy is going to do over the next six months.
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Taylor Wimpey share price boosted by UK budget this month
Taylor Wimpey has resumed payment of dividends, which will attract many investors back into the shares. The company said it would pay out roughly 7.5% of net assets, at least £250m per year, with a proposed final dividend in the area of £151m. This equates to a 4.4p per share pay out.
The share price was boosted back in November when Taylor Wimpey said it was expecting to post a full year profit at the upper end of expectations.
“One could argue the property market could run out of steam when the stamp duty holiday does come to an end, but overall business optimism is on the rise thanks to the UK’s relatively successful vaccine distribution scheme,” said David Madden, an analyst with CMC Markets. “If all goes according to plan, the country should be operating without restrictions in late June, which should spur economic activity. Taylor Wimpey is bullish in its outlook, announcing in November that it had agreed to acquire £826m worth of land, significantly higher than its typical acquisition rate, which sends out a strong message.”
The UK construction sector does seem to be well on the way to recovery. House builders across the board are talking about strong order books. Institutional; investors are expecting further positive news flow from Taylor Wimpey.