Housebuilder Taylor Wimpey (TW.) shot to the top of the FTSE 100 leaderboard with an 11.3% gain to 137.27p on Monday. The jump came after a company update that not only pointed to full year results to December 2020 edging towards the top of expectations for 2020, but also flagged a return of paying dividends.
The update also said performance will be ‘materially’ ahead of expectations in 2021.
The company projected it would end 2020 with a net cash balance towards the upper end of its guidance of between £550 million and £750 million, above the cash balance £545.7 million at the end of 2019 – subject to the timing of conditional land purchases.
The company plans is using its balance sheet strength to acquire new land and is also looking to reduce costs – stripping out a tier of group management.
The company expects to recommence ordinary dividend payments in 2021, starting with the payment of the 2020 final dividend. It will review a special dividend in 2021 for payment in 2022.
‘Chief executive Pete Redfern said: 'We have made good progress in the second half of the year to date, maintaining a robust sales rate and building a strong forward order book.’
AJ Bell investment director Russ Mould said: ‘Building back profitability brick by brick, Taylor Wimpey is winning over the market in a big way. What is striking about the latest update is its confidence not just in this year – when the pent-up demand from lockdown and a stamp duty holiday have been obvious tailwinds – but also next year.
‘To tell the market you will top expectations in 2021 – when the jobs situation in the UK may well have deteriorated – is a bullish move.
‘This is underpinned by the company’s bumper order book and the fact that house sales agreed now will not complete until next year.’