Last weekend, Berkshire Hathaway Chair Warren Buffett released his annual shareholders’ letter.  

It contained some nuggets of investing wisdom, as always. Here are five that caught my eye.

1. Compounding can have incredible effects

Berkshire paid one dividend under Buffett decades ago but has preferred to plough its profits back into building the business ever since.

That is known as compounding. A private investor can do it even with a small ISA, by using dividends to buy more shares.

Buffett is a fan and referred in the letter to “the magic of long-term compounding”.

2. A long-term approach to investing can be lucrative

Clearly, as a compounder, Buffett believes in investing for the long term.

Indeed, he pointed to just how lucrative such an approach can be when it comes to taking a “buy and hold” approach to share ownership.

He wrote that Berkshire’s time horizon, “is almost always far longer than a single year. In many, our thinking involves decades. These long-termers are the purchases that sometimes make the cash register ring like church bells”.

3. Be realistic about your investment capabilities

Buffett is among the most successful stock market investors in history.

Yet he recognised that even he can and does make errors: “I expect to make my share of mistakes about the businesses Berkshire buys”.      

If that is true of Buffett, it is undoubtedly true of a small private investor like me. This is why I pay close attention to risks when looking for shares to buy.

4. Buy the business, not just the management

In the past Buffett has said that – while he obviously appreciates great management — he likes to invest in businesses that could be run by an idiot, because one day they might be.

As he explained this time around, “a decent batting average in personnel decisions is all that can be hoped for”.

5. Shares can be an easy way to buy a stake in a brilliant business

I found this idea very interesting: “really outstanding businesses are very seldom offered in their entirety, but small fractions of these gems can be purchased Monday through Friday on Wall Street and, very occasionally, they sell at bargain prices”. I would add this happens in London, too.

Warren Buffett’s investment in Coca-Cola (NYSE: KO) is an example.

Coca-Cola has some outstanding business characteristics. Its target market is large, resilient, and spans the globe. The company’s brands, proprietary formulas, and distribution network all help set it apart from rivals.

I see them as long-term competitive advantages. Some of the marketing money Coca-Cola is deploying today will still be influencing shoppers’ purchase decisions decades from now.

Yes, there are risks. Shifting consumer tastes mean sweet drink sales volumes could fall. Packaging cost inflation has added substantial costs in recent years.

Still, Coca-Cola is a profit machine that has raised its dividend per share annually for over six decades.

It is very difficult to buy such a company in its entirety. Warren Buffett has the necessary financial firepower, but companies like Coca-Cola are rare and rarely for sale in their entirety at an attractive price.

As Buffett noted in his letter, though, the drinks maker’s shares can be bought on the New York stock exchange by even an investor of very modest means.

Unsurprisingly, Berkshire owns a large stake.

I’ve been keeping a close eye on the easyJet (LSE: EZJ) share price lately. It’s easy enough to spot. It hasn’t exactly been whizzing around.

While rival International Airlines Group (LSE: IAG) jumped another 9% on February (28 February) easyJet’s struggling to make headway, up just 2% last month. 

Over one year, the IAG share price is up a dizzying 130% while easyJet fell 7%. And it’s down 45% over five years.

Given that the budget carrier trades on a dirt cheap price-to-earnings (P/E) ratio of just 8.2, surely it should be taking off. But no. It’s stuck on the tarmac.

Can the FTSE 100 stock play catch up?

I’ve been tempted to buy easyJet more than once. But every time I check its performance, I breathe a sigh of relief that I haven’t. The airline released its Q1 update on 22 January, and it was a mixed bag.

Passenger numbers rose 7% and group revenues climbed 13% to £2.04bn. But revenue per seat came in slightly below expectations at £74.36, when analysts had hoped for £75. Worse, it posted a loss before tax of £61m. Even though that was big improvement on the previous year’s £126m loss, investors weren’t thrilled.

So why is easyJet struggling while IAG’s flying high? One issue is that easyJet relies heavily on the European short-haul market, which remains ultra-competitive and exposed to economic uncertainty. The European economy isn’t exactly flying.

People are feeling the pinch from inflation, and budget-conscious consumers may be opting for even cheaper alternatives like Ryanair.

IAG, on the other hand, benefits from lucrative long-haul routes and premium-class passengers who are less price-sensitive. Business travel has rebounded, and that’s helping to drive its margins. easyJet doesn’t have that luxury.

That said, there are reasons to be optimistic. Its holiday division, easyJet Holidays, is growing fast, delivering a profit of £43m in Q1, up £12m year-on-year. 

It won’t be an easy ride

The board’s also planning to increase capacity by 8% to 103m seats this year. If demand holds up, that could help it claw back some lost ground.

At some point, the market might wake up to easyJet’s valuation gap. It looks incredibly cheap for a company with strong brand recognition, solid balance sheet and a growing holiday business. 

But just because a share is cheap doesn’t mean it’s going places. If economic conditions worsen and demand softens, it could stay cheap for some time.

Incredibly, IAG’s P/E is actually lower at 7.4 times. Plus it has momentum on its side. With a strong earnings outlook and investors continuing to back it, there’s no sign of turbulence yet. Maybe that’s the one I should be buying.

So am I finally going to buy easyJet shares? I feel like the opportunity is staring me in the face. This looks like an exciting growth opportunity, but I also fear I’m missing something. Stocks aren’t cheap for no reason. Plus IAG looks like it could have further to fly. There’s an easy solution of course. Split the difference between the two.

Some might call that cowardice. I prefer the word diversification. I’ll buy easyJet and IAG as soon as I get some cash in my trading account.

One common way to generate a second income is to build up a portfolio of shares that pay dividends.

I do that myself. One of the shares I own as part of my passive income plan sells for pennies.

Penny share with powerful income potential

The share in question is Income and Growth Venture Capital Trust (LSE: IGV).

Like it says on the tin, it is a venture capital trust. So it invests in small and medium-sized businesses it reckons have good growth potential.

When it comes to its own growth, Income and Growth has been a non-performer. The share price is down 11% over the past five years.

So why do I like it?

The answer lies in the other part of the trust’s name: income.

This trust has been a solid dividend payer for years. In those same five years, while the share price has fallen 11%, the company has paid 48p per share in dividends to shareholders.

That is equivalent to around 76% of the current share price.

I think the dividends could keep on coming

Still, as with any share, past performance is not necessarily an indication of what may happen in future.

So, while Income and Growth currently has a dividend yield of 9.5%, that does not automatically mean that £1,000 invested today will earn £95 of dividends next year.

However, I hold the share because I have confidence in its long-term potential when it comes to boosting my second income. The trust aims to pay at least 6p per share in dividends annually. That indeed equates to a 9.5% yield.

Over the past 13 years, the trust has met or exceeded that target every year.

For that to continue,  it needs to continue generating cash, whether through dividends from companies in which it has a stake or – more commonly – by selling a shareholding and generating cash.

Exposure to unlisted growth stories

It has been doing a good job of that over the years.

One risk I see at the moment, however, is that it is not a great market in which to be offloading shares in small companies at a good profit. Or, as the trust managers put it in their most recent annual report, the “exit environment remains subdued”.

Still, the trust managers have a good track record of buying into promising companies, holding them for a number of years, and then selling, sometimes at a substantial profit.

There are some duds, of course: that risk goes with the territory of investing in unlisted companies in their growth phase.

But overall, the approach has repeatedly proven to work, underwriting the substantial dividend from from Income and Growth.

That suits me fine, as it adds to my second income. My expectations for share price growth (if any) are modest, but from a dividend perspective, I like this share a lot and have no plans to sell it.

I first bought JD Sports Fashion (LSE: JD) shares in January last year believing I was picking up a top-tier growth stock on the cheap. 

I saw its share price dip as a buying opportunity. When it fell again, I averaged down. The third time I bought the stock, I convinced myself it couldn’t go any lower. Yet here I am, sitting on a 28% loss. 

So what went wrong? And more importantly, is there still a case for holding – or even buying more?

Can this FTSE 100 loser be a winner again?

JD Sports has taken a beating and investors like me have felt the pain. The retailer has now posted two disappointing Christmas trading updates in a row, sending the share price tumbling. 

Cost-of-living pressures have hit consumer spending, particularly on discretionary items like trainers and sportswear. Pricing power appears weaker than before, amid heavy discounting. 

This once-mighty FTSE 100 growth stock, which was a darling of the index, is now down 33% over the past year and a staggering 57% over two . It’s been a brutal collapse. And I jumped in while the bricks were still falling.

JD Sports shares look dirt cheap with a trailing price-to-earnings ratio of just 6.5. That’s less than half the average FTSE P/E of around 15. It’s also far below historical levels. But cheap shares don’t always mean a bargain.

Profitability is under pressure and growth has slowed. Its expansion strategy looks promising, as it makes a big push into the US after buying retailer Hibbett for $1.1bn. But international trading comes with new risks these days, notably the threat of trade tariffs. Margins are also being squeezed as JD discounts to boost sales.

So while the stock may seem undervalued, recovery’s far from guaranteed.

Can this growth stock grow again?

Despite its troubles, JD Sports still has strengths. It has a dominant position in the UK. The US market could still be a game-changer, if it gets its execution right.

The company also has strong relationships with big brands like Nike and Adidas and the athleisure trend doesn’t appear to be going away, despite some doubters. If JD Sports can muddle through its current challenges, it could rebound strongly.

The 15 analysts offering one-year share price forecasts have produced a median target of 124p. If correct, that’s an increase of almost 60% from today. A quite staggering return, if it happens. I think 2025 will be too politically and economically bumpy for that to happen, but we’ll see.

Critics say the board hasn’t quite woken up to the scale of the challenge it faces, or drawn up a convincing turnaround strategy.

So where does that leave me? One part’s easy. I’m not crystallising that 28% loss. I still believe in its recovery potential.

The question is whether I have the nerve to buy more. The shares are volatile, and any further setbacks could send them even lower.

I might regret it one day but I’m not buying. I’ve thrown enough money at this stock for now. I don’t think it’s game over, but JD Sports faces a mighty battle to turn things round. I’ll sit tight.

The long-term timeframe of a Stocks and Shares ISA is one of its attractions to me as an investor.

When it comes to passive income, that can mean taking some time to build up sizeable dividend streams before taking them out each year in cash.

£1K+ annually from a £9k ISA

As an example, consider an investor who has a spare £9K available to put into a Stocks and Shares ISA.

The first move, of course, would be choosing the right Stocks and Shares ISA to put the money into. Like most investors, I prefer the dividends from my ISA to provide me with extra income rather than funding a stockbroker’s luxury lifestyle.

Investing the money and taking the dividends right away when they come in is one option. At an 11.1% yield, a £9K Stocks and Shares ISA would be generating £1,000 annually in passive income.

But an 11.1% is not currently a realistic dividend yield from a diversified portfolio of FTSE 100 dividend shares. The index’s highest-yielding member is Phoenix Group, which offers 10.3%. But many are lower.

Take two: £1K+ a year from a £9K ISA

Back to the drawing board.

An alternative would be to invest in lower-yielding shares (still well above the FTSE 100 average of 3.5%, though) and reinvest the dividends initially, an approach known as compounding. At some point, dividends could then be drawn out as cash.

To illustrate: if the investor compounds the £9K at 8% annually, after five years the Stocks and Shares ISA should be worth around £13,224. At an 8% yield, that ought to produce passive income streams of around £1,058 annually.

Building a portfolio of quality dividend shares

Remember, that 8% number is net. In other words, it is after the fees and costs of the Stocks and Shares ISA. As I said earlier, you can see why choosing the right ISA is important.

How achievable is an 8% yield from a range of quality shares?

In today’s market, I think it is achievable. I say “range” as I would not want to put all my eggs in one basket. Instead I would keep my ISA diversified. No dividend is ever guaranteed to last.

As an example, British American Tobacco (LSE: BATS) is one that might be worth considering for a place in such a portfolio.

The FTSE 100 firm has raised its dividend per share annually and plans to keep doing so. Currently, the dividend yield on offer is 7.7% (the 8% target is just an average, so an investor could aim to hit it with some slightly lower-yielding shares balanced out by some more lucrative ones).

Will that last? Plans are only plans, after all.

Cigarette volumes are declining in many markets. Owning premium brands like Pall Mall gives British American pricing power it can use to help offset lower volumes, but in the long term I do see declining cigarette usage as a big risk to profits and revenues.

British American obviously does too, which explains why it has been building its non-cigarette business at speed.

Meanwhile, the company remains highly cash generative. It has a strong brand portfolio, global distribution network and economies of scale. Keeping cash generation strong is important as it can help keep those juicy quarterly dividends flowing.

Being a shareholder in carmaker Tesla (NASDAQ: NYSE) can look a lot like being on a roller coaster. On one hand, Tesla stock has crashed 41% since mid-December. On the other hand, even after that slump, it is still worth 32% more than it was as recently as October.

Over five years, Tesla stock is up 533%. I would be thrilled if my portfolio did even half as well as that!

So, might Tesla still be overvalued after its recent tumble? Or could this be a buying opportunity for my portfolio?

Here’s what great investors often get right

Tesla is a classic example of a momentum stock. It can move up and down – sometimes substantially – for reasons other than the fundamental performance of its business.

It is also a company that frequently makes headlines.

That can seem bad, as right now when weakening sales volumes in some European markets hit the news. But the headline-grabbing nature of the company is also what has helped propel it from just an idea to a firm with a market capitalisation of $883bn in just 22 years.

Throughout history, hugely successful investors like Ben Graham, Warren Buffett, and Peter Lynch have all had one thing in common.

They could step back from the day-to-day noise and focus on a long-term investing approach that considers whether a company’s current valuation accurately reflects how much it is likely to be worth years down the line.

Tesla’s potential is starting to collide with reality

So, what does that mean for the valuation of Tesla?

It can help to think of the company as a collection of discrete businesses under one umbrella.

Primary among these is the vehicle maker. Sales volumes last year fell slightly and a crowded marketplace is pushing down selling prices and profit margins across the industry.

But Tesla does have strengths in the motor trade: economies of scale, a proven vertically integrated business model, powerful brand, and large installed user base.

Next is the power generation business. This is growing fast in a market with high long-term demand. Tesla has expertise in battery storage that can help.

Here, though, I see less of a long-term unique competitive advantage than in cars. Still, it could be a solidly profitable business in future just like many well-established power providers.

What else?

Robots? For now I see this as an idea more than a business. Whether Tesla has a sustainable competitive advantage here remains to be seen.

Self-driving taxis? Again, this is somewhere between the drawing board and real world commercialisation. It could boost Tesla car sales substantially. But this is also a space where multiple sophisticated and deep-pocketed rivals including Waymo parent Alphabet are jostling for space.

On balance, Tesla surely has bucketloads of potential. But it is operating in a challenging and fast-moving environment, across multiple markets.

I still won’t touch the share at this price

Tesla stock sells for 138 times last year’s earnings.

That still looks very overvalued to me. Does the long-term potential of the above collection of business justify it, when considering the risks as well as the potential?

I do not think so.

At the right price I would snap up Tesla stock in a heartbeat. But it is still too costly for my tastes.

High-quality, blue-chip FTSE 100 companies don’t generally exhibit huge volatility swings. This is more often a characteristic exhibited by smaller-cap stocks. Mining companies, however, are a whole different ball game. But for me a roller-coaster share price can often present opportunity.

Business in flux

The last couple of years have been miserable for Anglo American (LSE: AAL) shareholders. Multiple profit warnings, loss-making lines of business, and soaring costs have seen its share price fall over 40%.

It got so bad that last year BHP attempted to take over the firm. In the end, the Board decided to back the CEO’s radical turn-around plan, the largest in its 108-year history.

As part of its portfolio simplification, it has already divested itself of its steelmaking coal business for $4.8bn. Later in the year it will receive $500m upon the sale of its nickel assets.

Platinum and De Beers

One of the crown jewels in its portfolio is platinum group metals. Here, the sale is being handled by means of a demerger. The standalone business is expected to begin trading on the London Stock Exchange in June.

One of the reasons it chose to list in London was to limit risk of flowback. If the stock had been registered on a foreign stock exchange, institutional investors may have been forced to sell, causing the stock price to plummet. In addition, Anglo will initially retain 19.9%, further protecting shareholders.

One business it’s still attempting to offload is diamonds. A surge in popularity for cheaper lab-grown diamonds has decimated prices over the last few years.

De Beers has an iconic brand and is an undoubted global leader in the industry. I personally don’t expect a buyer to emerge until prices recover somewhat. What Anglo wants to avoid is giving the assets away on the cheap.

Simplified portfolio

Once the transformation is complete, Anglo it will be left with two assets contributing to earnings: copper and iron ore. Woodsmith, its crop nutrients offering, will remain part of its portfolio but is unlikely to move to production this decade.

Copper is its prized asset; it was the primary reason BHP swooped in the first place. Its three top mines account for 6% of known global copper reserves and resources. By the early 2030s, it expects annual production to exceed 1bn tonnes.

Demand for copper is predicted to surge. For example, EVs require four times as much copper as a traditional internal combustion engine. The pathway toward EV adoption may be unclear, but long-term adoption trends remain favourable.

Probably the largest growth driver will come from electricity grid expansion. EVs need power. AI needs it too. But grids have not been modernised for decades. National Grid predicts a seven-fold increase will be required. Globally, the International Energy Agency expects investment by 2050 to total $11trn.

Of course, no pathway to an expected future is ever guaranteed. But one fact is undeniable. Finding new economically viable copper deposits is getting harder and harder. I believe a copper deficit is inevitable. That’s why I am positioning my portfolio for such an eventuality now. I believe its prudent for investors to consider Anglo American as part of a balanced portfolio. I certainly have.

There’s never a dull moment over at BP (LSE: BP.) these days. With the valuation gap between itself and the other oil supermajors having grown into a chasm, and an activist investor, Elliott Management, pushing for a radical overhaul, the business desperately needed to do something to arrest the share price blues. Enter stage right a strategy reset. But the million dollar question: will it work?

Black gold

The centrepiece of its strategy is an 18% boost to investment in oil and gas production. $30bn over the next three years. 70% will be earmarked to oil, the rest to gas.

During its full-year results presentation in early February, it laid out 10 major projects that had been given the green light. One of the most interesting is the development of the Kirkuk oil and gas fields in Iraq.

The fields were first discovered over 100 years ago by a consortium that included BP. Given the well-documented history of the country, a tie-up with the government must be seen as a major coup. After all, the whole area sits in one of the most prolific hydrocarbon regions on the planet.

Over the lifetime of the project, the investment could be as large as $25bn. But this investment could be worth its weight in gold. It estimates that the fields and surrounding areas house over 20bn barrels of potential resource.

Execution risk

Key to a successful strategy is improving fundamentals. By 2027, BP is targeting growing adjusted free cash flow at a compound annual growth rate of 20%, from around $8bn price adjusted in 2024. Return on average capital employed (ROACE) will improve by four percentage points to 16%.

But the devil is in the detail. Words are cheap, it’s execution that matters.

Ultimately, the success or failure of a strategy comes down to the employees who will need to implement it. That’s why in any major transformation I like to primarily hone in on the ‘people dimension’.

Five years ago, BP marketed itself as ‘beyond petroleum’. A lot of the hires since then would have come in potentially with a certain set of believes and mindsets about what that entailed. Now they are being asked to re-assess such core beliefs.

The point of giving just this one small example is to highlight the significant execution risks the company faces over the next few years.

Energy is life

Ultimately, BP got the pace of the energy transition wrong. The main reason why I first opened up a position in the company and Shell back in 2020 was a belief that the demise of oil and gas was exaggerated.

I certainly didn’t predict Covid, a supply chain reset, and a war in Europe, all of which contributed to soaring energy prices. But today, the investment case for BP is just as compelling as in 2020.

Demand for energy is growing. Increasing urbanisation, a growing Asian middle class, onshoring of manufacturing in the US, AI and data centres. Even green technologies need it. Everywhere you look, the world is hungry for energy.

Who knows how long BP will languish behind its peers. My guess is that over time the valuation gap will close. That’s why I continue to reinvest my dividends and buy more shares when finances allow.

Since February 2020, the FTSE 100‘s grown (with dividends reinvested) by an average annual rate of 7.4%. I’m one of those people who’s benefitted from this increase. For several years now, I’ve been buying ‘blue-chip’ stocks to help fund my retirement.

But to my surprise it’s estimated that only 10% of Footsie shares are owned by pension funds. Despite this, I still believe the UK stock market offers excellent value for money.

FIRE

In 1992, a book was published, Your Money or Your Life, which claimed that — by making a number of sacrifices — it was possible for people to leave the workforce in their 30s or 40s. This doesn’t necessarily mean retiring. It’s all about giving people the choice of whether to work or not.

One of the ideas put forward is known as FIRE (financial independence, retire early). This involves saving or investing at least 50% of annual income. Apparently, it’s now gaining popularity via TikTok.

Good in theory

I’m going to test this concept by looking at the FTSE 100 and considering a ‘typical’ person.

According to Finder, the average UK adult, living in a city, has £11,268 of annual disposable income. Investing half of this each year (£5,634) for 20 years — at an annual growth rate of 7.4% — would generate an investment pot of £259,168.

Although impressive, I don’t think it’s enough to retire early.   

However, in my opinion, this doesn’t mean we should reject the idea of saving and investing. Instead, I think it’d be better to invest less for longer. That way it’s possible to get a more sustainable balance between living and saving to invest. This might not lead to an early retirement but it’d be a comfortable one.

Of course, buying shares carries some risks. There’s no guarantee that past growth rates will be repeated. However, history suggests that it’s possible to generate wealth by buying UK equities and taking a long-term view.

One idea

Those looking for a FTSE 100 stock to include in a well-balanced portfolio could consider buying shares in International Consolidated Airlines Group (LSE:IAG).

The group owns five airlines, including British Airways and Iberia, and is well positioned to benefit from the anticipated growth in air travel over the coming decades. The International Air Transport Association is predicting 4.1bn more passengers each year by 2043.

Its brands span the premium and low-cost markets, helping it to avoid overexposure to one particular segment.

At the moment, British Airways has approximately 50% of the slots at Heathrow. The government’s recent decision to allow further expansion at the airport has been welcomed by International Consolidated Airlines’ directors.

However, airline stocks can be risky. The group’s last annual report identified 58 risk factors covering everything from non-compliance with laws and regulations to strikes and an IT meltdown.   

Airline stocks are particularly vulnerable to rising fuel and staff costs. In the US alone, over the past four decades, 84 airlines have either gone bust or applied for bankruptcy protection.

But International Consolidated Airlines’ balance sheet remains robust. And its shares have a lower price-to-earnings ratio than the average of the world’s other listed airlines. Also, its 2024 results showed that its post-pandemic recovery is continuing. Its earnings comfortably beat analysts’ expectations.

For these reasons, those looking to build a decent retirement portfolio could consider International Consolidated Airlines shares.

Looking for the best passive income stocks to buy next month? Here’s one to consider that I think could be an excellent source of long-term dividends.

For 2025, its dividend yield is more than double the FTSE 100 forward average of 3.5%.

8.4% dividend yield

A sluggish economy continues to cast a cloud over the housing market. There’s also ongoing uncertainty over future interest rates amid a recent pickup in inflation.

Yet homebuyer activity remains resilient, suggesting Taylor Wimpey (LSE:TW.) could be a strong pick for dividend investors to consider.

City analysts expect the full-year dividend to rise 1% in 2025, to 9.56p per share. Following recent share price weakness, this means the dividend yield on Taylor Wimpey shares is an enormous 8.4%.

Dividend risk

There is some risk to current dividend forecasts, having said that.

The expected payout for this year is higher than predicted earnings of 9.13p, leaving the builder to rely on its balance sheet and hope that the housing market recovery doesn’t fizzle out.

On the plus side, Taylor Wimpey has a tonne of cash on its books to help it meet dividend projections. Net cash was £564.8m as of December.

What’s more, latest housing market data remains highly encouraging.

According to Nationwide, average UK property prices rose 0.4% month on month in January, to £270,493. This was up from growth of 0.1% in December.

On an annual basis, prices were up 3.9% last month.

Strong update

Latest trading data from Taylor Wimpey itself is also pretty reassuring. The Footsie firm said on Thursday (27 February) that net private sales rate between 1 January and 23 February was 0.75 per sales outlet per week, up 12% year on year.

Meanwhile, its total order book (excluding joint ventures) rose to £2.3bn, comprising some 8,021 homes. This compares with £1.9bn and 7,402 respectively at the same point in 2024.

A robust level of orders means Taylor Wimpey expects to record between 10,400 and 10,800 completions, excluding joint ventures, in 2025. That’s up from 9,972 last year.

According to analyst Andy Murphy of Edison: “The company’s robust balance sheet, increased land approvals, and streamlined planning pipeline position it for volume growth in 2025, even as mortgage affordability and build cost pressures remain key factors to monitor.”

A long-term buy?

Even despite the near-term risks, I think Taylor Wimpey is an attractive passive income stock to consider. And it’s not just because of that 8%-plus dividend yield.

I’m expecting the business to perform strongly over a longer time horizon as population growth drives housing demand. Government plans to build 1.5m new homes between 2024 and 2029 — faciliated by a bonfire of planning regulations for homebuilders — will give housebuilders added scope to ramp up profits growth.

Taylor Wimpey’s deep land bank puts in a strong position to exploit this opportunity too. It owned roughly 136,000 plots as of the end of 2024, after the company added a further 12,000 over the course of the last year.

While it’s not without risk, I think Taylor Wimpey’s a great stock to consider for long-term dividend income.