RE: I think this is going to fly soon2 Jan 2020 01:30
Tempus tip Persimmon in today’s Times Business section.
Persimmon
A geared bet on the property market, the economy and consumer confidence, the UK’s second-biggest homebuilder is wrestling with rebuilding its reputation after an executive bonus scandal and criticism over the quality of its properties.
Persimmon’s shares are trading at a bargain-basement price of just under 9.8 times consensus forecast earnings for one of the biggest dividend yields in the FTSE 100, at just over 8.6 per cent.
Some investors and analysts question whether the dividend payout is sustainable, particularly once the Help to Buy scheme comes to an end in 2023.
However, at 31.7 per cent for the first half, Persimmon’s gross margin is among the highest in the sector and its cash reserves of more than £830 million underpin the dividend. That Persimmon’s average selling price, whijuch stands at about £242,912, is lower than its prevailing benchmark should mean it is well positioned in a housing market recovery. It is also desperate to recover its reputation for quality, a characteristic whose power should not be underestimated.