Taylor Wimpey shows confidence with special dividend

(Reuters) - British housebuilder Taylor Wimpey Plc (TW.L) promised investors larger payouts till 2018 than previously expected on Tuesday, underpinned by strong demand for property in the UK.

Shares in Taylor Wimpey touched their highest in more than four months at 196.8 pence, making the stock the second-top percentage gainer on London's blue chip (.FTSE) index.

The company said it would pay shareholder 1.3 billion pounds by the end of 2018, which analysts at Jefferies said was higher than its previous dividend payout target of 1.13 billion pounds.

Taylor Wimpey said it would pay a special dividend of 300 million pounds in July 2017 and bump up its ordinary dividend, so that a minimum of 150 million pounds would be given to investors via regular payouts from 2017.

Despite the potentially adverse impact on the domestic property market if UK votes to leave the European Union on June 23, Taylor Wimpey said the UK new build housing market remained "very positive" across most of its geographies.

This comes against an increasingly challenging backdrop for UK housebuilders. British surveyors reported the sharpest fall in enquiries from potential homebuyers since 2008 in April, reflecting a new tax on landlords and the upcoming referendum on European Union membership.

By the end of April, Taylor Wimpey said its stock was more than 70 percent sold for 2016.

The company also raised its financial targets for 2016-2018 and said it expected operating margins of 22 percent on average over these three years. It reported an operating profit margin of 20.3 percent for last year.

Liberum analysts said the step up in margin outlook is likely to drive consensus upgrades, as the brokerage raised its price target to 183 pence and upgraded its rating on the stock to "Hold" from "Sell".

Shares in the company were up 6.4 percent at 196.1 pence at 0843 GMT. The stock is down 3.5 percent year-to-date, outperforming the Thomson Reuters UK Homebuilding Index (.TRXFLDGBPHBLD), which fell 11 percent over the same period.

(Reporting by Esha Vaish and Aastha Agnihotri in Bengaluru; Editing by Sunil Nair)