Analysts at Jefferies believe the capital returns offered by listed UK housebuilders are “becoming increasingly difficult to ignore” as an investment opportunity.
Equity analysts Glynis Johnson and Priyal Woolf said in a note that “there is now a strong focus on February/March results to provide greater clarity on future capital allocation” from a variety of listed names.
The team has a buy rating on 10 listed housebuilders: Barratt, Bellway, Berkeley, Countryside, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey, Vistry and Watkin Jones. Its top picks are Persimmon and Vistry.
On the former, the analysts said surplus cash of £350m-£400m could be returned to shareholders.
“With an impending change of chief financial officer, March 2022 may prove too early for the chief executive officer to look to return the full extent of this ‘surplus cash’. But we see opportunity for the group to announce a gradual return of this excess capital, either through interims dividends in the coming years or through share buybacks,” the analysts said.
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