Despite a strong rebound in activity since the pandemic lows, housebuilders like Barratt Developments have failed to reach their pre-pandemic heights. In the first half of this year (HY 2022), Barratt’s profits exceeded pre-Covid levels for the first time. However, the share price remains nearly 40% down from its February 2020 price of 878p per share.
There are a variety of reasons why investors may be cautious when it comes to housebuilders in the current environment. We are entering a period of higher inflation and interest rates will likely rise in line with this. This could eventually lead to a tightening of demand in the housing market as mortgages begin to get a lot more expensive.
Nevertheless, throughout the past decade, the UK’s housebuilders have demonstrated a steadfast resilience to external economic shocks and have offered some of the most consistent returns in the form of dividends. With a 7.4% dividend yield and over £1.1 billion in net cash, could Barratt Developments offer investors a unique opportunity to further build their income portfolios?
Profile
What are the company's principal business activities, how does it generate its revenues?
Barratt Developments is one of the UK’s leading housebuilders, building over 17,200 homes in 2021 and aiming to build between 18,000 to 18,250 in 2022. The company’s business model starts with the purchase of strategic land assets, for which the necessary planning consents are then obtained before building commences on these plots.
Through its 3 consumer brands, Barratt Homes, David Wilson, and Barratt London, the company offers a wide range of private and affordable housing developments. These include stylish one-bedroom flats in London and large 6 bedroom family homes in the countryside. Operating via 6 regions throughout the UK, prices for private homes outside of London typically range from c. £70,000 to over £1 million.
Barratt Developments also owns a commercial business, Wilson Bowden, which develops spaces for office parks, industrial complexes and engages in town centre regeneration projects.
Size, Sector & Exchange
One of the largest housebuilders in the UK, Barratt Developments, is worth £5.53 billion at the current share price of 540.8p. Operating in the Homebuilding & Construction Supplies industry, the company trades under the wider Consumer Cyclicals sector. Barratt Developments is a constituent of the FTSE…
