Down 55% with an 11.75% yield – what on earth’s the matter with Taylor Wimpey shares? 

I’ve spent a couple of years shovelling cash into Taylor Wimpey (LSE: TW) shares. Am I mad? Fairly probably.

I began shopping for the UK housebuilder in 2023, dazzled by its low valuation, juicy yield and stable stability sheet. But I knew it confronted challenges.

Housebuilders took a beating after the 2016 Brexit vote, falling 40% on fears the property market would crash. However it didn’t. The sector confronted extra uncertainty throughout the 2020 pandemic, but there was no Covid crash. And when inflation and mortgage charges soared attributable to the Ukraine warfare, a home worth crash was forecast however by no means got here. The Iran warfare hasn’t triggered one both but Taylor Wimpey shares have nonetheless plunged.

Why has this FTSE 250 inventory been hit so exhausting?

They’re down nearly 55% over the final 5 years and 33% over 12 months. Buying and selling at round 80p, they’re at ranges final seen 13 years in the past.

A fast look at Taylor Wimpey’s pre-tax income for the final 5 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 large drop in 2025 was pushed by distinctive prices, primarily £243.8m for post-Grenfell cladding hearth security provisions. Most of the different points have been out of the board’s management.

Larger inflation has squeezed patrons and pushed up mortgage charges. It’s additionally pushed up the value of labour and supplies. Then elevated employers’ Nationwide Insurance coverage,and two large hikes to the minimal wage additional squeezed margins. 2026 was speculated to be higher however now mortgage charges are rising once more attributable to the oil worth spike.

Taylor Wimpey isn’t an outlier by the approach as each main UK housebuilder has taken a beating too.

Is that dividend sustainable?

That headline trailing yield of 11.75% is gorgeous however sadly, you received’t get it. The ahead yield is projected to drop to eight.16% in 2026. This desk will present you what’s going on:

That vast 107% bounce in 2021 was the board compensating for cancelling shareholder payouts in the pandemic. Dividends have been lower in the final two years, and by a hefty 19.45% in 2025. We are able to’t rule out additional cuts till market circumstances enhance. So when will that be?

I can’t see a swift decision to the Iran warfare. Even when we get one, inflation is prone to stay on the excessive facet. Mortgage fee expectations are altering from at some point to the subsequent. The UK financial system is struggling and Taylor Wimpey has already warned of a softer order e-book and pricing in 2026. However on the plus facet, it did really feel capable of greenlight a £52m share buyback.

I nonetheless consider in Taylor Wimpey. However till the financial cycle swings again in its favour, I count on it should proceed to battle, and the dividend will stay beneath stress. Revenue seekers capable of take a long-term view may think about it, however I believe there are much less difficult restoration alternatives on the FTSE right this moment.

Do you have to make investments £5,000 in Taylor Wimpey Plc proper now?

When investing knowledgeable Mark Rogers and his staff have a inventory tip, it might pay to pay attention. In spite of everything, the flagship Twelfth Magpie Share Advisor publication he has run for almost a decade has offered hundreds of paying members with high inventory suggestions from the UK and US markets.

And proper now, Mark thinks there are 6 standout shares that buyers ought to think about shopping for. Wish to see if Taylor Wimpey Plc made the record?

Harvey Jones owns shares in Taylor Wimpey.