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LONDON (Alliance News) - Taylor Wimpey PLC on Tuesday said the UK new-build housing market remains "very positive", as it upgraded its dividend policy to pay at least GBP150.0 million in ordinary dividends per year, and increased its medium-term financial targets, resulting in a plan to pay out GBP1.30 billion in dividends between 2016 and 2018.
The housebuilder said it has a strong order book position, with over 70% sold for 2016 private completions as at the end of April 2016, and said this positions it well for the remainder of the year.
Taylor Wimpey also noted that it has conducted a "comprehensive review" into its strategy and concluded that it will enhance its dividend policy, in that its policy will now comprise a dividend to be paid throughout all stages of the housing cycle and additional significant surplus cash returns to be made at appropriate times in the cycle.
In light of this, Taylor Wimpey said that, from 2017, it will pay an ordinary dividend of around 5.0% of its net assets and which will be at least GBP150.0 million per year. Taylor Wimpey said this is "intended to provide a minimum annual return to shareholders throughout the cycle, including through a 'normal downturn'."
The housebuilder also noted that it was operating within the optimal size range of its short-term landbank and this, together with the increased profitability of the company, means that it will continue to generate cash that is surplus to the business's requirements. As such, shareholders will continue to benefit from this by way of a special dividend.
In 2016, shareholders will receive a total dividend of around GBP357.0 million or around 11.0 pence per share, Taylor Wimpey said, comprising of an ordinary dividend of approximately GBP57.0 million and approximately GBP300.0 million in special dividends. Subject to shareholder approval, Taylor Wimpey said it is anticipated that shareholders will receive a total of GBP450.0 million or around 13.8 pence per share in 2017, an increase of 26% from 2016, also including a GBP300.0 million special dividend.
Going forward, the proposed special dividend will continue to be announced one year in advance at the half year result, Taylor Wimpey added.
Taylor Wimpey also raised its medium-term financial targets, which will apply for the period from 2016 to 2018. These targets are to generate an average annual return on net operating assets of 30%, an average operating profit margin of 22%, and the GBP1.3 billion in dividends, to be paid in cash to shareholders over the period.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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