A sky-high yield isn’t the only reason to consider a top income share, but it certainly helps. It needs to be approached with caution, though.
House builder Taylor Wimpey (LSE: TW) offers one of the most generous dividends on the FTSE 250 today. It’s forecast to yield 7.55% in 2026 and 8.93% in 2027. That’s far more than savers can earn from a best buy account, and there’s the chance of some share price growth on top. That brilliant combination of potential capital growth and dividend income is a key reason why shares beat almost every rival investment over time.
However, investors have to accept a bit of volatility along the way. Or, in the case of Taylor Wimpey, quite a lot of it.
Why have Taylor Wimpey shares plunged?
The housebuilding sector has had a rough ride for years. Too many young people can’t afford to buy a home, hitting demand and sales prices. Previously, they got support under the government-backed Help to Buy scheme, but that was axed in 2023.
At the same time, builders have been forced to absorb a big increase in employer’s National Insurance, alongside two inflation-busting minimum wage hikes and higher building material costs. Taylor Wimpey had to pay £435m in cladding fire safety remediation, following the Grenfell Tower disaster. Profits have taken a beating as a result. They hit £827.9m in 2022, but have been steadily sliding and totalled just £146.5m in 2025.
Given all these pressures, it’s hardly surprising that the Taylor Wimpey share price is down 30% over the last year, and 50% over five. While investors have got plenty of income in that time, the share price slump will have left many sitting on an overall paper loss. I hold the stock, and that includes me.
Many expected the Bank of England to continue cutting interest rates this year, sparking a property market revival. Unfortunately, the Iran conflict and subsequent oil price spike put paid to that. Yet, with growing hopes of peace, that could change.
If the oil price continues to fall, and inflation and mortgage rates slide too, then buyers may return to the market, driving up demand and sales prices, and ultimately, Taylor Wimpey’s profits. That’s still a very big ‘if’.
Can this beaten-down FTSE 250 stock recover?
Incredibly, Taylor Wimpey shares now trade at levels last seen in 2013, some 13 years ago. The stock looks pretty decent value, with a forward price-to-earnings ratio of 13.7, but I wouldn’t call it dirt cheap.
That is scope for recovery. On optimistic days for the wider stock market, Taylor Wimpey shares typically do quite nicely. But they also slump on the bad days. A UK recovery would help, but the economy continues to struggle and that’s unlikely to change this year.
The income is still the big attraction here, despite a recent cut to the dividend. If interest rates fall and the recovery kicks in, Taylor Wimpey could climb quite nicely from here, but that’s far from a done deal. I still think it’s worth considering for income seekers who are up for a challenge, but they should take a long-term view.
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Harvey Jones owns shares in Taylor Wimpey.
