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Persimmon Share Price Set To Rise On Dividend News

Published 10/11/2020, 08:03
Updated 03/08/2021, 16:15

The Persimmon (LON:PSN) share price is likely to rise on the back of the news that the company declared a second interim dividend of 70p which will be paid in mid-December.

Keep in mind the group paid an interim dividend of 40p in September. The third quarter update was short and sweet. Trading throughout the summer and demand was resilient. Obviously, construction work was impacted by the lockdown earlier in the year, but forward sales stand at £1.36 billion, which is 43% on the year. In terms of liquidity, Persimmon is in a very strong position as the level is £960 million, up from £371 million last year. The property market is in rude health, and not that long ago, Rightmove described the level of activity as a ‘mini boom’, and it is clear that Persimmon are in a good position to cash in on the buoyant market.

The first half figures were released almost three months ago, and the housebuilder declared an interim dividend of 40p. Keep in mind the full year pay-out last year was 125p. When comparing the two, the interim payment seems relatively small but it is of large significance because it projects an image of confidence. In the six month period, the number of house completions dropped by 35%, which is hardly surprising given the lockdown, but forward sales jumped by 20%.

Just before the pandemic took hold, the Persimmon share price set a record high, but then it dropped by almost 60% during the subsequent sell off. When the company posted its first half numbers in August, the stock hit a five month high. For over one week, the Persimmon share price has been driving higher and if the bullish trend continues it should target the 3,000p area. A pullback might encounter support at the 200-day moving average at 2,447p.

The Taylor Wimpey (LON:TW) share price surged yesterday on the back of its bullish trading statement. The company announced that it expects its full year operating profit for 2021 to be at the upend end of market expectations. In addition to that, it stated that completions for 2021 should be between 85% and 90% of the 2019 level. The company expects to invest significantly in land over the next 12 months, and that the company is bullish in its outlook. In February, Taylor Wimpey’s share price hit its highest level since 2007, but when the health crisis kicked-in, it sold off aggressively. Even though it has been pushing higher lately, it would still need to rally over 60% from its current levels to re-test the highs of February.

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