With dividend payouts from Britain’s blue-chips currently residing at record highs, there’s no shortage of brilliant ways to get rich on the FTSE 100.
One of the best ways to do just this, I believe, is by betting big on the housebuilders like Taylor Wimpey (LSE: LON:TW). These companies have benefitted hugely from government failure to fix the country’s massive property shortages, a theme which fresh analysis from the Public Accounts Committee once again laid bare.
The body has advised that the government will miss its 2020 public land sales target “by a wide margin” and, as a result, it would fail in its goal of selling enough land for 160,000 homes. Instead, only enough land for 69,000 homes will be secured, it estimates. Build rates in Britain are at their lowest level since Winston Churchill was in office and there’s plenty of evidence to suggest the problem will run into the 2020s and quite possibly beyond.
Great value, giant dividends It’s no surprise many people, myself included, expect the likes of Taylor Wimpey to keep reporting solid and sustained profits growth for many years to come. However, this particular business deals on a forward price-to-earnings (or P/E) ratio of 7.4 times, a reading which suggests it’s being grossly undervalued by the market.
In fact, I reckon such a low rating could prompt the builder’s share price to swell when half-year trading numbers are unpacked on Wednesday (31 July). Taylor Wimpey certainly impressed last time out in April when it advised “we are achieving a record sales rate and building a solid forward order book for the year.”
Despite rising fear over the UK’s direction of travel concerning Brexit, Taylor Wimpey’s share price has picked up some serious traction over the past month. Another set of rosy financials could set it on course for some more meaty gains in August. And one final motivation for share pickers to pile in during the coming weeks… its market-mashing prospective dividend yield which now sits at a whopping 10.1%.
A banking beauty Another FTSE 100 dividend star I’d happily buy in August is HSBC Holdings (LON:HSBA) (LSE: HSBA).
Like Taylor Wimpey, it offers a great blend of terrific value (a prospective P/E multiple of 11.4 times) and monster dividend yields (currently at 6.2%). What’s more, I reckon its interims slated for 5 August could prompt a sharp re-rating of the banking giant’s shares.
HSBC certainly impressed last time it released in May. Despite slowing growth in China and the surrounding area, not to mention the subsequent persistence of rock-bottom interest rates in this part of the world, the Footsie firm still saw revenues from Asia rise a solid 7% in the three months to April.
The result paid testament to the low banking product penetration and growing wealth levels in these regions where HSBC’s in the box seat to exploit.
A soaring top line is not the only thing to celebrate, though, with the business also making great progress on cutting expenses (operating costs dropped an impressive 12% in quarter one). Plenty to look forward to in the days ahead, then.
Royston Wild owns shares of Taylor Wimpey. The Motley Fool UK has recommended HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019