Some FTSE 100 stocks have shown wild swings in 2026, and Barratt Redrow (LSE: BTRW) is one of them — down 33%. But is this a long-term passive income bargain I’m sniffing?
The UK economy is precarious, the Iran war has pushed inflation up, and the prospect of getting back to those old low-interest days has vanished out of sight. And that’s given house builders, including Barratt Redrow, a painful kicking.
Short-term pain, long-term gain
But there’s one thing that short-term investors seem to be missing. When it comes to businesses with long-term potential, those serving the UK’s chronic housing shortage are surely among the ones that warrant the furthest horizons.
Can Barratt survive the downturn without too much discomfort? If it can, I reckon it could turn into one of the FTSE 100’s nicest dividend earners. And the company’s third-quarter update made Barratt look like it was thriving, not struggling.
Despite heightened macroeconomic uncertainty, we expect the Middle East conflict to have limited impact on FY26 performance, given our strong forward sales position and advanced build programme. We are therefore on track to deliver total housing completions and adjusted profit before tax in line with consensus expectations.
— CEO David Thomas, Q3 trading update
Highlights from the quarter include…
- On track to deliver between 17,200 and 17,800 total home completions
- Total forward sales of £3,539.2m, up from £3,138.6m
- Year-end net cash guidance raised to between £550m and £650m
Is Barratt Redrow’s financial position and outlook sufficient to see it through the current down spell? I think so.
What’s the valuation like?
In its most recent upgrade, RBC Capital said of the UK’s house builders: “We would call out Barratt and Persimmon as top of the class.” The investment bank put a 350p price target on Barratt, 38% ahead of where it is at the time of writing.
Forecasts put the 2026 price-to-earnings (P/E) ratio at an undemanding 10. And that could fall to eight by 2026, with earnings projected to rise. Perhaps more importantly, analysts expect Barratt’s net cash position to hold strong at least through to 2028.
Will it be long enough for investor sentiment to turn positive again on house builders? That’s a tricky one. With the upgrade, RBC also offered some cautions…
Asset valuations are back to levels last seen in the Great Financial Crisis and without a powerful catalyst we don’t see how to get valuations ‘back to the future’ … until newsflow turns positive there is limited fear of missing out.
— RBC Capital
The bottom line?
Right now, that fear of missing out does seem to be driving investors. I can’t think of any other reason they’d value SpaceX so highly, for one thing.
But the housing market still faces price pressure. And the forecast 5.5% dividend yield comes after a cut — analysts previously had 6.8% pencilled in. So we could see further pressure on FTSE 100 builders.
But I reckon this is a great time to consider getting in while the shares are cheap, and holding for the long term. The only reason I’m not buying is I already have enough Persimmon.
Should you invest £5,000 in Barratt Redrow right now?
When investing expert Mark Rogers and his team have a stock tip, it can pay to listen. After all, the flagship Twelfth Magpie Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.
And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Barratt Redrow made the list?
Alan Oscroft owns shares in Persimmon.
