£1.9bn dividend windfall from Persimmon

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The Independent Online

The City piled into Persimmon yesterday as the housebuilder unveiled a £1.9bn dividend giveaway, sending the shares roaring 13 per cent higher to 706.5p.

The windfall, which should see the company pay out £6.20 a share in dividends over the next nine and a half years, follows a strategic review of the business by chief executive Mike Farley. He said the decision came against an anticipated backdrop of "muted" growth for the housing market in the decade ahead, as mortgage lending makes a painfully slow recovery.

Persimmon built 9,360 homes last year, but Mr Farley said: "We have the capacity to build 13,000-14,000 homes but the issue for us is the lack of mortgage availability. We're at 50,000 [approvals] a year when it was 120,000. There aren't the funds available to get back to the long-run average of 80,000-90,000 for a considerable time."

Since the credit crunch began in 2007, Persimmon has slashed debt and spent about £1bn on cheaper land, which is feeding through to higher margins and profits. The company's pre-tax profits jumped 55 per cent to £148m.