For a 6% dividend, here is Taylor Wimpey's dividend forecast until 2028.

Throughout the last 14 years, Taylor Wimpey (LSE:TW.) shares have been paying dividends to shareholders. Although not a definitive plan, dividends are now well ahead of where they were in 2011, standing at 9.58p per share at the end of 2023 compared to 0.38p in 2011. And based on the latest analyst predictions, there may be more. place of growth

Investors should not take forecasts, especially long-term ones, as gospel. After all, they are known for their accuracy due to their high sensitivity to the ever-changing financial and economic situation. However, they are always a useful tool to get a rough idea of ​​what to expect.

So how realistic is a 10p dividend in 2028? And should investors consider this business as a potential investment?

Why stocks go up

Taylor Wimpey shares have been doing well over time. Since the start of 2024, the property developer has seen its market capitalization grow by just over 10%. However, looking at the group's recent financials, it seems that this upward trend is likely driven by investor expectations.

Its half-year 2024 results saw sales fall 7.3% to £1.52bn. At a closer look, this appears to be driven by a combination of weak home values ​​and fewer business completions. If we look at wages, the situation is even worse. Pre-tax profits during the six-month period fell by almost 60%, due to an increase in the group's fire safety provision to £88m and higher material costs.

Needless to say, this doesn't exactly sound like a catalyst for the share price to rise. However, it is the management's view that investors seem to be paying attention to.

Now that interest rates have started to fall, mortgages are starting to follow suit. Taylor Wimpey noted that it has started to see the first signs of an improvement in demand. So much so that management expected operating margins to expand in the second half of 2024.

In addition, despite falling behind in home completions during the first half, the group still expects to reach the high end of its full-year guidance of 9,500-10,000 properties. Coupled with higher margins, that means more sales and more profits are likely on the way – a trend that's expected to continue as interest rates continue to fall.

Looking at it for a long time

It's no secret that the UK has a housing shortage. In fact, a large part of the new government's document focused on this issue. And new policies have begun to be implemented to make it easier for housebuilders like Taylor Wimpey to step up their building efforts.

While that's a good spirit to have, it's not the first time politicians have tried to jump-start housing construction. It's too soon to tell if the workforce plan is working. But even if it does, there are still many other home developers chasing the same opportunity.

All things considered, I think a 10p dividend in 2028 is unreasonable. But given the growing volatility it's showing, this stock doesn't strike me as an amazing income opportunity. Therefore, I do not plan to add Taylor Wimpey shares to my portfolio today.