Down 33% with a 5.6% dividend yield, is this FTSE 100 stock a once-in-a-decade buy?

Some FTSE 100 shares have proven wild swings in 2026, and Barratt Redrow (LSE: BTRW) is one among them — down 33%. However is this a long-term passive earnings cut price I’m sniffing?

The UK financial system is precarious, the Iran warfare has pushed inflation up, and the prospect of getting again to these outdated low-interest days has vanished out of sight. And that’s given home builders, together with Barratt Redrow, a painful kicking.

Brief-term ache, long-term acquire

However there’s one factor that short-term traders appear to be lacking. With regards to companies with long-term potential, these serving the UK’s power housing scarcity are certainly among the many ones that warrant the furthest horizons.

Can Barratt survive the downturn with out an excessive amount of discomfort? If it may, I reckon it may flip into one of many FTSE 100’s nicest dividend earners. And the corporate’s third-quarter replace made Barratt seem like it was thriving, not struggling.

Regardless of heightened macroeconomic uncertainty, we anticipate the Center East battle to have restricted affect on FY26 efficiency, given our robust ahead gross sales place and superior construct programme. We’re subsequently on monitor to ship whole housing completions and adjusted revenue earlier than tax in line with consensus expectations.

— CEO David Thomas, Q3 buying and selling replace

Highlights from the quarter embody…

• On monitor to ship between 17,200 and 17,800 whole dwelling completions
• Whole ahead gross sales of £3,539.2m, up from £3,138.6m
• Yr-end internet money steerage raised to between £550m and £650m

Is Barratt Redrow’s monetary place and outlook adequate to see it via the present down spell? I believe so.

What’s the valuation like?

In its most up-to-date improve, RBC Capital stated of the UK’s home builders: “We might name out Barratt and Persimmon as prime of the category.” The funding financial institution put a 350p worth goal on Barratt, 38% forward of the place it is on the time of writing.

Forecasts put the 2026 price-to-earnings (P/E) ratio at an undemanding 10. And that would fall to eight by 2026, with earnings projected to rise. Maybe extra importantly, analysts anticipate Barratt’s internet money place to carry robust a minimum of via to 2028.

Will it’s lengthy sufficient for investor sentiment to show optimistic once more on home builders? That’s a tough one. With the improve, RBC additionally provided some cautions…

Asset valuations are again to ranges final seen within the Nice Monetary Disaster and with out a highly effective catalyst we don’t see get valuations ‘again to the longer term’ … till newsflow turns optimistic there is restricted worry of lacking out.

— RBC Capital

The underside line?

Proper now, that worry of lacking out does appear to be driving traders. I can’t consider another cause they’d worth SpaceX so extremely, for one factor.

However the housing market nonetheless faces worth stress. And the forecast 5.5% dividend yield comes after a minimize — analysts beforehand had 6.8% pencilled in. So we may see additional stress on FTSE 100 builders.

However I reckon this is a nice time to think about getting in whereas the shares are low cost, and holding for the long run. The one cause I’m not shopping for is I have already got sufficient Persimmon.

Do you have to make investments £5,000 in Barratt Redrow proper now?

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And proper now, Mark thinks there are 6 standout shares that traders ought to contemplate shopping for. Need to see if Barratt Redrow made the record?

Alan Oscroft owns shares in Persimmon.