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Taylor Wimpey (trading statement 13 November)
Now that Help to Buy has a definite end date, the clock is ticking on housebuilders to get their affairs in order and ready themselves for a less conducive macro environment. Cost pressures continue to build, and it looks like we have further to go with regards to a slowdown in house price growth. Taylor Wimpey and others will find the next few years much harder, and a squeeze in margins means that the dividend may come under threat.
At 7.6 times forward earnings the shares are cheap, well below the five-year average of 9.9, but the dividend yield has now it 10% on a forward basis, which makes it liable to a cut in due course.
Taylor Wimpey has continued to decline since the May highs, and while it has rebounded from the October lows, the price has faltered below 170p. Further declines target 160p and then 150p.