I’ve spent a few years shovelling money into Taylor Wimpey (LSE: TW) shares. Am I mad? Quite possibly.
I started buying the UK housebuilder in 2023, dazzled by its low valuation, juicy yield and solid balance sheet. Yet I knew it faced challenges.
Housebuilders took a beating after the 2016 Brexit vote, falling 40% on fears the property market would crash. But it didn’t. The sector faced more uncertainty during the 2020 pandemic, yet there was no Covid crash. And when inflation and mortgage rates soared due to the Ukraine war, a house price crash was forecast but never came. The Iran war hasn’t triggered one either yet Taylor Wimpey shares have still plunged.
Why has this FTSE 250 stock been hit so hard?
They’re down almost 55% over the last five years and 33% over 12 months. Trading at around 80p, they’re at levels last seen 13 years ago.
A quick glance at Taylor Wimpey’s pre-tax profits for the last five years tells us why the shares have had such a rotten run.
- 2025 – £146.5m
- 2024 – £320.3m
- 2023 – £473.8m
- 2022 – £827.9m
- 2021 – £679.6m
The big drop in 2025 was driven by exceptional costs, primarily £243.8m for post-Grenfell cladding fire safety provisions. Most of the other issues were out of the board’s control.
Higher inflation has squeezed buyers and driven up mortgage rates. It’s also pushed up the cost of labour and materials. Then increased employers’ National Insurance,and two big hikes to the minimum wage further squeezed margins. 2026 was supposed to be better but now mortgage rates are rising again due to the oil price spike.
Taylor Wimpey isn’t an outlier by the way as every major UK housebuilder has taken a beating too.
Is that dividend sustainable?
That headline trailing yield of 11.75% is stunning but sadly, you won’t get it. The forward yield is projected to drop to 8.16% in 2026. This table will show you what’s going on:
| Total dividend | Growth | |
| 2025 | 7.62p | (19.45%) |
| 2024 | 9.46p | (1.25%) |
| 2023 | 9.58p | 1.91% |
| 2022 | 9.40p | 9.56% |
| 2021 | 8.58p | 107.25% |
That huge 107% jump in 2021 was the board compensating for cancelling shareholder payouts in the pandemic. Dividends have been cut in the last two years, and by a hefty 19.45% in 2025. We can’t rule out further cuts until market conditions improve. So when will that be?
I can’t see a swift resolution to the Iran war. Even if we get one, inflation is likely to remain on the high side. Mortgage rate expectations are changing from one day to the next. The UK economy is struggling and Taylor Wimpey has already warned of a softer order book and pricing in 2026. But on the plus side, it did feel able to greenlight a £52m share buyback.
I still believe in Taylor Wimpey. But until the economic cycle swings back in its favour, I expect it will continue to struggle, and the dividend will remain under pressure. Income seekers able to take a long-term view might consider it, but I think there are less challenging recovery opportunities on the FTSE today.
Should you invest £5,000 in Taylor Wimpey Plc right now?
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Harvey Jones owns shares in Taylor Wimpey.
