Should I buy this FTSE 100 stock with its 8% dividend yield?

When shopping for shares for my portfolio, one in all my goals is for them to make me a passive revenue. With that in thoughts, ought to I buy FTSE 100 home builder Persimmon Homes (LSE:PSN) for my portfolio? It at the moment has a tempting 8% dividend yield. 
FTSE 100 alternative
Persimmon Homes is among the UK’s largest and most profitable home builders. Headquartered in York, the enterprise contains 31 regional working companies for nationwide protection. The UK housing market is at the moment experiencing a post-pandemic increase and Persimmon might be effectively positioned to journey the wave with its footprint and monitor report.
As I write, the Persimmon shares are buying and selling for two,892p per share. At this level final yr, shares had been buying and selling for 20% much less at 2,466p per share. In the yr to this point, the share value has elevated practically 5% from 2,767p per share to present ranges. I consider this share value rise is because of elevated demand for brand spanking new houses and Persimmon’s current efficiency. At present ranges, Persimmon has a price-earnings-ratio of roughly 14, which I don’t take into account costly. Add to that its dividend yield, and I consider it might be a superb FTSE 100 alternative for my portfolio.
Performance and passive revenue alternative
Last month Persimmon launched a buying and selling replace masking 1 January to 30 June. It reported that new dwelling sale completions had been near pre-pandemic ranges final seen in 2019. A ahead order e book on the finish of June equated to £1.82bn. Persimmon additionally efficiently bought over 10,000 new plots throughout 48 places.
Reviewing the monetary highlights from Persimmons replace, the FTSE 100 incumbent mentioned it might be paying a dividend of 110p per share in respect of the yr ended 31 December 2020 to be paid on 13 August 2021. In addition, income rose to £1.84bn which is larger than 2020 and 2019 ranges for a similar interval. Furthermore, money of £1.32bn additionally exceeded 2020 ranges for a similar interval.
These stable financials and dividend cost imply that Persimmon has a dividend yield of roughly 8%. This is among the greatest dividend funds throughout the FTSE 100 index. If I had been trying solely to make a passive revenue, Persimmon shares might contribute to this.
Risk and reward
Like all FTSE 100 shares with a juicy dividend yield I should take into account the dangers concerned. First, some analysts level in the direction of this elevated demand as a housing bubble. Almost all bubbles burst so this resurgence and efficiency might come to an finish. Also, because the pandemic, the price of uncooked supplies for home builders has elevated. This rise in supplies price might have an effect on the financials and in flip any dividend cost for buyers. 
Overall I perceive there are credible dangers however I would take into account including Persimmon shares to my portfolio. It is among the greatest gamers within the UK home constructing market and has the attain and footprint to maximise its earnings based mostly on present tailwinds within the housing market. I consider this might imply extra revenue and extra dividends, growing its already spectacular dividend yield and my passive revenue.

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Jabran Khan has no place in any of the shares talked about. Views expressed on the businesses talked about in this article are these of the author and due to this fact could differ from the official suggestions we make in our subscription providers comparable to Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we consider that contemplating a various vary of insights makes us higher buyers.

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