Persimmon yields 13.8%, but can you trust it to deliver?

With a dividend yield of 13.8%, Persimmon looks like a highly attractive prospect for income investors. But that sort of yield can also indicate a company in distress. Rupert Hargreaves looks at the numbers to find out if it's sustainable.

Persimmon new-build houses
Persimmon focuses on the affordable and first-time buyer end of the housing market.
(Image credit: © Alamy)

Persimmon shares currently offer the second-highest yield in the FTSE 100. With a dividend yield of 13.8% for 2023, (according to Refinitiv analyst estimates) the homebuilder looks highly attractive from an income perspective.

However, a high dividend yield (especially one in the double-digits) can indicate a company in distress. It can be a sign that investors are avoiding the stock, pushing the value of the shares down and the yield up.

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Rupert Hargreaves
Contributor and former deputy digital editor of MoneyWeek

Rupert is the former deputy digital editor of MoneyWeek. He's an active investor and has always been fascinated by the world of business and investing. His style has been heavily influenced by US investors Warren Buffett and Philip Carret. He is always looking for high-quality growth opportunities trading at a reasonable price, preferring cash generative businesses with strong balance sheets over blue-sky growth stocks.

Rupert has written for many UK and international publications including the Motley Fool, Gurufocus and ValueWalk, aimed at a range of readers; from the first timers to experienced high-net-worth individuals. Rupert has also founded and managed several businesses, including the New York-based hedge fund newsletter, Hidden Value Stocks. He has written over 20 ebooks and appeared as an expert commentator on the BBC World Service.