Deutsche Bank hails top-ranking dividend yields of UK housebuilders

26th May 2015 10:04

Deutsche Bank has named Taylor Wimpey, Barratt Developments and Bovis Homes as its top picks in the UK housebuilding sector, highlighting the attractive dividend yields across the industry.In its review of the sector, the bank hiked target prices for a host of stocks, including Taylor Wimpey, Barratt, Bovis, Berkeley, Bellway, Crest Nicholson, Persimmon and Redrow.The bank said the sector is set to achieve an average dividend yield of 4% in 2015, with some companies paying out over 6%, which is among the top ranks of yields across the FTSE 350."At this time, we see the marginal investor in the sector as the yield funds, and it is interest from these investors that we believe is likely to provide a floor in the share prices for the sector, particularly for the FTSE100 participants," it said.The bank said that it sees an average of 11% upside to stocks across the sector.As for Taylor Wimpey, Barratt and Bovis, Deutsche Bank sees further upside for those investors valuing solely on dividend.It said the three stocks are "well positioned to benefit from strategic and government sourced land respectively providing comfort on longer-term returns".After a change in its valuation methodology to accommodate yield, Deutsche Bank has lifted its price targets for Taylor Wimpey from 173p to 210p, for Barratt from 576p to 659p and for Bovis from 1,114p to 1,266p.The three stocks were trading up 1.9%, 1.7% and 0.4% on Tuesday morning.