Top Three UK Property Developers To Invest In

Investing in real estate is profitable if you get a headstart in the right direction. However, The upfront costs of becoming a private landlord or a property developer along with the stress and risks involved make the prospect of buying shares in the professionals much more appealing, But the trick is to find the right company! You can do so by researching and evaluating the track record of companies before investing. 

Financial details about a company, such as dividend payouts, market cap, and gross profit, can tell a lot about its performance, and it is always wise to know these details. 

So which are the best property developers to invest in the UK? How to measure a company’s performance? Are companies that produce building materials ideal for investment?

If you have these questions in your mind, you have landed on the right page. We have done hours of research to bring you three of the best businesses that provide you with the best returns. 

Without further ado, let’s get started.

How to measure a company’s performance?

Measuring a company’s financial performance is crucial before investing. These details help you evaluate various aspects of a company and how you can benefit from it.

Here are some of the crucial factors that you need to evaluate before investing:

Company’s Liquidity

A company’s liquidity is one of the crucial financial metrics you need to consider before investing. Financial statements, such as income statements, cash flow, and balance sheets, can help you learn more about the company’s performance over the years.

One of the best ways is to analyze the balance sheet’s liquidity in cash form. In other words, a company must have enough money to support or cover its expenses. Additionally, checking out the current ratio can reveal a company’s financial position.

Income Statement

After determining liquidity, your next step should be to evaluate a company’s income statement, including financial metrics, such as net income growth and earnings growth.

These metrics can help you understand the financial condition of a company and simplify your investment decision. For instance, evaluating the growth lines and checking whether the lines are parallel can help you decide better. 

Examine Returns

Another way of finding out the financial position of a company is by checking its Examine Returns, such as Return on equity, Return on Assets, and Return on capital. If a company has strong returns, it is undoubtedly worth a shot!

Generally, a company with a 30% annual return is the one you should consider. Additionally, you can check how a company is using its assets to generate revenue before investing.

Operating Cash Flow

Operating cash flow is another crucial factor you need to consider before making an investment. You can check the operating cash flow by evaluating the cash flow statement and determining whether the company generates real cash. 

For instance, it would be wise to invest in a company wherein cash flow increases even after making capital expenses. However, if the company makes money by selling business assets and stocks, it is better to avoid it.

Now that you know what to consider before investing, here are the top three companies worth investing in the UK.

1. Taylor Wimpey

If you want to invest in a business that excels in building houses, Taylor Wimpey can be your ideal pick! Did you know? It is one of the best companies with the highest market capitalization. No wonder why it has thousands of happy clients!  

They state they build more than 15,000 high-quality homes a year and in the first half of the year, they managed 7303.

Taylor Wimpey is one of the largest house-building companies in the UK. Formerly known as Taylor Woodrow plc, the company merged with its fellow rival George Wimpey in 2007. Besides, you can find this company on the FTSE 100 Index of the London Stock Exchange. 

The company has an excellent track record of providing quality houses to its clients. Additionally, their market evaluation has been a profitable prospect for investors looking for a different approach to investing in real estate in the UK.

Market cap

As per the latest standings, Taylor Wimpey’s market cap stands at 165.50 GBX. The company has been maintaining a consistent run on the stock ratings, which is why they are considered one of the best businesses for investment. 

Dividend payout

Taylor Wimpey follows an excellent strategy to manage the market cycle. This strategy helps the company to balance its capital requirements while returning maximum capital to its shareholders. Additionally, they maintain their balance sheet flexibility and strength without altering the capital structure.

According to the latest reports, Taylor Wimpey paid 4.14 pence a share dividend representing a 2.67% yield, making them a lucrative option for aspiring stock and share investors. These metrics also make them a reliable business that can offer profitable returns without taking excessive risks.

Plus, you can opt for a bank transfer or deposit in your building society account to receive your dividend payments. 

Gross profit

The housing demand in the UK has seen a new surge, and companies like Taylor Wimpey consider this opportunity to maintain their position as Britain’s third-largest house-building company. 

According to reports, the company forecasts an operating profit of $1.14 billion or 820 million pounds in 2021, surpassing their top-end range of 756 – 808 million pounds. 

Growth

After Covid-19 halted the works and earnings of Taylor Wimpey, the company overcame the hurdles of 2020 by achieving a new feat. According to reports, the company constructed 7,300 homes in the first half of 2021 and planned to expand this tally to 14,000. 

The target of building 14,000 houses in 2021 would propel their operating profit to about 820 million pounds, which is a significant leap forward compared to last year. 

Taylor Wimpey delivers high-quality homes and ensures long-term sustainability, making it a profitable investment option for many. And we can’t think of any reason why this company shouldn’t be on your list!

2. Barratt Developments

Barrat Developments has been a consistent name featuring in the London Stock Exchange’s FTSE 100 Index because of its high market capitalization. It is another renowned house-building company in the UK and operates across Wales, England, and Scotland.

The company started its journey as Greensitt Bros in 1958 but acquired its present credentials after Sir Lawrie Barratt assumed the company control. Besides getting a new name, the company shifted its office from Newcastle to Coalville in Leicestershire.

The company is a lucrative option for investors in stocks or shares with high returns. 

Market cap

The latest market cap of Barratt Developments stands at 682.19 GBX. The company has been a favourite of investors as it maintains a consistent run on the stock ratings. 

Dividend payout

After Covid 19 played havoc in 2020, Barratt Developments churned out a new dividend policy, ensuring a 7.5 pence share dividend representing a 4.45% yield. The policy came into effect in February 2021, with final payments slated to be released in November 2021. 

You can also opt for their Dividend Re-Investment Plan that allows you to purchase additional Barratt shares with your dividend payouts. 

Gross profit

Barratt Developments have seen an upward trend over the years. Their revenue grew from 3.42bn to 4.81bn. The figures improved the company’s net income by 65.07%, from 399.70 million to 659.80 million. That’s impressive! 

Growth

After suffering a significant setback in 2020 due to Covid-19, Barratt Developments experienced a successful run in 2021. Their growth report indicates an increase of 64.66% in earnings per share. This percentage can become a deciding factor for aspiring investors looking for an alternative way to invest in real estate.

According to reports, Barratt Developments expects to complete more than 16,250 homes in 2021. 

3. Persimmon plc

Persimmon plc is a leading house-building company that can act as a safe refuge for aspiring investors. The company is an integral part of the London Stock Exchange’s FTSE 100 Index and is one of the largest house-building companies with excellent market capitalization.

Duncan Davidson founded the company in 1972 and named it after the horse that won the 1896 St. Leger and Derby. The company began its operations regionally but soon earned a global reputation because of its high-quality projects.

By the end of 2001, Persimmon started delivering 12,000 houses per year, which is an incredible feat to achieve. 

Market cap

Persimmon is a consistent name in the stock exchange. As per the latest records, the company had a market cap of 2,747.00 GBX with fewer dips in the past months. It is undoubtedly one of the best businesses to invest in to reap higher returns.

Dividend payout

According to reports, Persimmon pays two dividends each year. However, they may run special dividend schemes from time to time (based on special requirements). 

The company has a consistent dividend payout policy, which allows its beneficiaries to reap returns two times each year. Despite facing a steep challenge last year due to the Covid-19 crisis, the company plans to increase its dividend payout, which is good news for investors.

Gross profit

As per the company’s performance report, Persimmon generated housing revenue of 1.75 billion pounds in the first half of 2021, which is a significant jump from 1.10 billion pounds during the same period last year. 

The figures translate into higher profit numbers with 480.1 million pounds compared to 292.4 million pounds last year. Persimmon has been delivering robust financial performance and is growing as a profitable investment option for aspiring investors.

Growth

Apart from returning magic profit figures, the company has been growing in its business and customer satisfaction. Their promise to deliver high-quality houses has put them on the map, and many customers prefer to own a Persimmon house today.

According to the latest reports, Persimmon completed 7,406 houses in the first half of 2021 compared to 4,900 homes in 2020. 

Creating sustainable value, strong trading performance, and a positive outlook are a few factors that make Persimmon a profitable option for investors. 

Other investment alternatives

Apart from investing in large house-building companies, businesses that manufacture building materials and bricks can become an excellent alternative for investors. 

Since building materials are essential to building houses, you can get high returns by investing in their stocks. However, with a sea of businesses claiming to be the best, it can get pretty overwhelming to decide on one! 

After weeks of scouring the real estate market and research, we landed on Ibstock as the best alternative investment. Why? To begin with, they offer higher returns than their competitors.

Ibstock

Ibstock is one of the leading suppliers of brick products in the UK. The company has a long history of producing high-quality building materials that date back to the early 1800s. 

Their products include:

• Clay bricks

• Concrete roof tiles

• Concrete fencing

• Brick components

• Pre-stressed concrete products

• Concrete rail products

The company’s strategy to deliver value to its customers has driven its performance in recent years. This excellent market performance makes them one of the most profitable companies for investors. They also have signed lucrative contracts with the British government to supply goods for infrastructure upgrades planned over the next few years. With Brexit and supply chain issues becoming more of an issue a UK based company of this size is in a great position to propel itself into a profitable future.

Market cap

According to the latest standings, the market cap of Ibstock plc stands at 217.00 GBX with fewer dips. Its consistent run on the exchange can provide profitable returns for investors.

Dividend payout

Ibstock plc pays two dividends per year with an approximate dividend cover of 2.2 pence. The payout may differ if the company rolls out special schemes as per their requirements. 

According to reports, the last dividend paid by the company was 2.5 pence per share, which is an ideal amount for those looking for an alternate trading option. 

Gross profit

The company increased its total revenue by 54% to 202 million pounds by June 2021. The gross profit for the company stood at 72 million pounds with 40.81 million pounds as operating income and 10.97 million pounds as their net income. 

Considering that the company achieved a 54% jump compared to their last revenue, this may be a great time to invest some money!

Growth

Although Ibstock plc is not a widely-known stock, Perhaps due to the company’s nature as a raw materials manufacturer which isn’t as exciting as the popular out fancy tech companies, its recent performance in the London Stock Exchange has turned many heads in the industry. Its compelling stock price looks like a lucrative option for many investors!

Conclusion

Investing in any company can be tricky, especially if you are a beginner. However, with little effort and a detailed evaluation of the market, you can find yourself a profitable deal in any market space. The property market in the UK is experiencing rapid growth and with a variety of investment options for everyone, it can be a difficult task to narrow it down. By investing in home builders you get exposure to the booming housing market but get some insulation from the volatility as new homes are still needed across the country. If the housing market did experience a dip the profit the property developers make can absorb some of the blow. The one major concern would be problems with raw materials which we could experience with supply chain issues due to Brexit and covid. 

It would be best to research, compare, and evaluate the companies before investing, but as the saying goes during a gold rush sell shovels and I feel in a way home builders take that role in the housing market.