Investors looking to add a FTSE 100 income stock to their portfolio might want to take a look at housebuilder Barratt Redrow (LSE: BTRW). Once they’ve done that, they might ask themselves this question: what on earth is Harvey Jones thinking?
That’s a rational response. The Barratt Redrow share price has had a shocker. It’s crashed 43% in the last year, and 63% over five. Who would go anywhere near a stock like that?
Those are awful numbers, and there could be more pain to come. But this might also be a buying opportunity, for long-term investors who are up for the challenge.
Why is Barratt Redrow doing so badly?
Barratt Redrow isn’t alone. Pretty much every UK housebuilder has taken a beating. The Brexit vote in June 2016 sent their shares into a spiral and they’ve never recovered. Affordability issues, Covid uncertainty, inflation, the cost-of-living crisis, and demise of the government-backed Help to Buy scheme in 2023 all added to their woes.
This year was supposed to be different with the Bank of England expected to keep cutting interest rates. Then came the Iran war, driving up inflation and mortgages.
Housebuilding is seen as a cyclical sector but lately it’s been down all the way. Barratt Redrow now trades at levels last seen in 2013, some 13 years ago. But there’s a chance it may be about to turn.
It seems we may have a lasting ceasefire deal with Iran, and analysts are suddenly talking about an oil price glut rather than a spike. That could take the edge off inflation and bring down mortgage rates. Yesterday, the Bank of England held the base rate at 3.75%, rather than increasing it.
In that rosy scenario, Barratt Redrow shares look good value trading at a price-to-earnings ratio of 10.35. And that could be the perfect time to buy them.
How safe are those dividends?
A £1,000 investment would buy 380 shares at today’s price of 263p. In 2025, the board paid a total dividend of 17.6p. So 380 shares would have delivered a handy £67 last year. Can the income keep rolling?
The trailing dividend yield is a mighty 6.7% but don’t be fooled. That’s expected to retreat to 5.4% in 2026. As profits struggle, Barratt Redrow has been cutting dividends. In 2024, it cut them by a thumping 52%. There was better news in 2025 though, as the total dividend was hiked 8.64%.
We are still waiting for the worst of the inflation shock to wash over us, even after the Iran deal. The Bank of England may yet hike interest rates. And even if mortgage rates do fall, buyers aren’t exactly feeling flush right now. The UK economy is barely growing. Younger people are struggling to buy homes.
I still think Barratt Redrow is worth considering, for the right investor. I’d be tempted myself, but I already have a big stake in rival Taylor Wimpey. It’s performed in exactly the same way, but has a higher forward yield of 7.7%. This is an exciting opportunity, but the road to recovery could be bumpy.
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?
Harvey Jones owns shares in Taylor Wimpey.
