Galliford Try is currently the highest yielding housebuilder with a dividend yield of 8%. That’s a very high yield, but is it enough to offset the risks of this notoriously cyclical industry?
Neil Woodford’s team certainly seem to think UK housebuilders are in a good position.
That’s partly because both major UK political parties have promised to fix the broken housing market and finally increase supply to a more sensible level (although how credible those promises are is another matter).
Of course, if supply is increased then it will involve the building of lots of houses, which should obviously play into the hands of Galliford Try and other housebuilders.
However, the stock market seems to disagree, at least in the case of Galliford Try, otherwise the company wouldn’t have that 8% dividend yield.
So in the January issue of Master Investor magazine I decided to take a look at the company to see who was right; the optimistic Mr Woodford or the pessimistic Mr Market:
Is an 8% yield enough for a housebuilder?