If you think the FTSE 100‘s great performance means there are no cheap dividend shares worth considering today, think again. I see one in particular that warrants closer inspection.
FTSE 100 laggard
Granted, 2026 hasn’t been particularly kind to housebuilder Persimmon (LSE: PSN) or its investors. While the index has delivered a near-5% gain year-to-date, the company’s value has plummeted by almost a quarter.
The longer-term performance is even worse. Anyone buying in mid-2021 would now be looking at a paper loss of around 65%. As I type, the FTSE 100’s up 46% over the same period.
To some extent, this terrible ‘return’ isn’t surprising. The exceptionally low-interest-rate environment that buyers once enjoyed came to an end when the Bank of England was forced to tackle post-pandemic inflation. As rates went as high as 5.25%, just making ends meet became the number-one objective for most households.
Persimmon was always likely to suffer. Sure, rates have come down since. But it would be a stretch to say the housing market has been firing on all cylinders or that consumer confidence has returned.
Building costs also remain elevated and could push even higher. Worryingly, operating margins at the business in 2025 were already around half what they were in 2020.
Is Persimmon actually a bargain?
If all this makes it sound like an investment in Persimmon today would be silly, it’s worth thinking about the contrarian view.
Today, the stock trades on a price-to-earnings (P/E) ratio of 10. This makes it the cheapest among its peers, albeit by a slight margin. It’s also low relative to UK shares in general. Put another way, some of the aforementioned risks are already reflected in the price.
Then there’s the passive income on offer. A yield of 6% makes it among the most generous in the FTSE 100. For context, a £5,000 investment would generate £300 for the year.
Other attractions are the company’s sizeable land bank. This is something that will surely become more valuable as time goes on, providing long-term protection from inflation.
Let’s also not forget that the demand for new housing continues to outstrip supply. Political pressure to increase construction isn’t likely to go away either.
My verdict
There is, of course, a chance that trading will become more difficult in the months ahead as the full consequences of the Iran-US conflict become clearer. In such a situation, we could see another cut to the cash dished out to investors (payouts were slashed by 75% in 2022). So it’s important not to get too fixated on that above-average yield.
Half-year results in August should provide some guidance on the near-term outlook for dividends. On an optimistic note, Persimmon’s balance sheet looks pretty robust for a business in a cyclical sector.
But since we can’t know if/when the housing market will get its mojo back, spreading cash around the market rather than backing one or two horses still looks the prudent move.
The long-term tailwinds suggest this might be one stock to consider tucking away for a few years. However, I think I’ll wait to see what the next set of numbers looks like.
Should you invest £5,000 in Persimmon Plc right now?
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Paul Summers has no position in any of the shares mentioned
