Housebuilder Taylor Wimpey today said that it would reinstate its dividend after a year in which profit before tax at the firm fell 68 per cent.
Having cut its dividend when the coronavirus forced it into site closures in the second quarter, the FTSE 100 company said it would pay out a final dividend of 4.14p per share.
If approved, that means that the blue chip will pay out £151m in total.
Shares in the firm rose 2.9 per cent this morning as traders welcomed the news.
The firm also said that it would pay out an additional £125m for cladding improvements for 232 apartment buildings that may require fire safety works due to the government’s new guidance.
The money will fund safety improvement works for leaseholders in its apartment buildings constructed over the last two decades, Taylor Wimpey said.
Housing Secretary Robert Jenrick welcomed the news, saying: “This is the responsible approach that I expect developers across the country to take and I’m calling on others to do the right thing as well.
“Where the industry has not yet done so, the Government is stepping in with over £5 billion in funding to protect leaseholders from the costs of cladding remediation.”
Profit plunge ‘in line’ with expectations
Despite the plunge in profit, which fell from £835.9m in 2019 to £264.4m this year, Taylor Wimpey said it had performed in line with its expectations.
Although house completions plummeted in the first half of the year due to site closures, the firm said that build capacity was nearly at 2019’s levels in the second half.
In total, the firm built 9,799 properties, down 39 per cent on the year before, when it built 16,042.
In a sign of how strong the UK housing market was in 2020 despite the pandemic, Taylor Wimpey said that the average price for its houses increased from £269,000 to £288,000.
Chief executive Pete Redfern said: “2020 was a very challenging year, during which our priority has continued to be the health and safety of our colleagues, customers, suppliers and subcontractors.
“Operating performance has bounced back strongly in the second half of 2020, with build capacity returning to near normal levels and strong sales.
“We are confident in the medium term performance of the housing market and therefore accelerated our land purchases from May 2020 as high-quality land became available at attractive rates. We are now focusing on driving efficiencies across the business, the roll out of our new house type range and implementing our ambitious new environmental strategy.
“The UK housing market has been resilient and continues to reinforce our confidence in our outlook. We are a cash generative business with a strong balance sheet, and we are pleased to announce today that we will reinstate our ordinary dividend in line with our aim of providing a reliable income stream to our shareholders.”
Russ Mould, investment director at AJ Bell, said: “In many respects Taylor Wimpey’s 2020 results are in the rear-view mirror and investors are looking at the open road ahead and liking what they see on the sales outlook and dividends.
“While the numbers themselves bear big scars from the property market deep freeze at the start of the pandemic, the market is more interested Taylor Wimpey’s positive start to 2021 and just how strong its balance sheet is after a period in which the company prioritised preserving cash.
“Taylor Wimpey, like several of its peers, was also busily buying land from May last year. This investment should result in a big pay-off down the line – as houses built on land bought at depressed values will be more profitable when sold.