The UK market’s roster of high-income stocks prominently features real estate companies. Barratt Developments PLC (GB:BDEV) and Persimmon PLC (GB:PSN) from the FTSE 100 index are famous among investors for their high dividends. Moving ahead, both of these companies are expected to reduce their upcoming dividends in order to conserve cash and navigate through the housing market downturn. Despite this, these stocks offer higher dividends than their counterparts in the market.
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In terms of capital growth, BDEV stock has a Moderate Buy rating from analysts, while PSN carries a Hold rating.
Here, we have used the TipRanks Top Dividend Shares tool for the UK market to shortlist these stocks. Such tools from TipRanks help investors pick and choose stocks as per their requirements and also make the process easy.
Let’s dig deeper into some details.
What is the Dividend of Barratt Dev?
Barratt Developments, a residential property builder based in the UK, is involved in a range of activities, including acquiring land and designing and constructing properties.
The dividend yield of the company is 8.93%, which is considerably higher than the industry average of 3.9%. Analysts expect the company’s profits to be hit by current economic challenges, which in turn could impact the dividends as well. Despite this, the company remains among the top dividend payers on the FTSE 100 index. In April, the company paid an interim dividend of 10.2p, which was lower than 11.2p in the last year.
Barratt aims to reduce its dividend coverage to 1.75 times by 2024 as part of its strategy to sustain consistent dividends despite declining profits.
Is Barratt Developments a Buy?
On TipRanks, BDEV stock has a Moderate Buy rating based on three Buy and six Hold recommendations. The average price target is 501.33p, which is 22.7% higher than the current trading levels.
What is Persimmon Expected Dividend?
Persimmon is another real estate company from the UK focused on residential property development.
The company has a dividend yield of 5.13%. In recent years, Persimmon has been distributing almost all of its profits as dividends. Moving forward, it is expected that the dividend payout will decrease by approximately 30-50% next year. Analysts forecast the dividend for 2023 to be around 114p per share.
Among all the players in the industry, the company has experienced the most significant impact from the crash in housing prices. Over the past year, the stock has witnessed a decline of more than 40%. However, analysts believe that the current price could be a favorable opportunity for investors, considering the potential for the stock to rebound.
Is Persimmon a Good Share to Buy?
PSN stock has a Hold consensus rating on TipRanks, based on one Buy, six Hold, and three Sell recommendations.
At an average price target of 1,198p, the stock has an upside potential of 19.2% at the current trading levels.
Conclusion
The UK housing market slowdown may intensify in the coming year, potentially necessitating additional reductions in dividend payouts. Nevertheless, BDEV and PSN continue to maintain impressive dividend yields, making them potentially attractive options for income investors.
