The first thing I look at when choosing a FTSE 100 dividend stock is the income it’s likely to pay me. Next, I look at its growth potential. If both look good, I’m in.

Last year, I looked at housebuilder Taylor Wimpey (LSE: TW), and decided it was likely to score on both fronts.

Like every major housebuilder, it was hit hard by the pandemic, when building sites were mothballed and supply chain problems marred the reopening.

The inflation shock then drove up interest and mortgage rates, hitting buyer demand, while forcing up the cost of labour and materials. This squeezed margins from both sides.

Taylor Wimpey is one of my favourite dividend stocks

Yet when I checked, Taylor Wimpey’s balance sheet looked pretty sound. It ended last year with modest net debt of just £126.8m, for example.

While it paused dividends at the start of the pandemic, along with many others, payouts quickly resumed. So I loaded up on Taylor Wimpey and I’m glad I did.

Over the last 12 months, the Taylor Wimpey share price is up 45.39%. Throw in a trailing yield of 6.13%, and the total return is above 50%.

So is it a good buy today? It’s certainly not as cheap. I bought when the shares traded at around seven times earnings. Today, the price-to-earnings ratio is 15.65. A price-to-revenue ratio of 1.6 suggests investors have to pay £1.60 for each £1 of sales Taylor Wimpey makes.

It still offers an impressive forecast yield of 6.04%, which rises to 6.21% in 2025. That’s nicely above the FTSE 100 average of 3.54%.

This FTSE 100 company is one of my favourites

Taylor Wimpey is forecast to pay dividends of 9.61p per share in 2025. Let’s say I wanted to generate £100 of monthly income, or £1,200 a year. To achieve that, I’d have to buy 12,487 shares in total. With the shares trading at around 157p, that would cost me £19,605, which is pretty much my entire Stocks and Shares ISA allowance.

That would also would unbalance my portfolio, as I’d have too much exposure to just one stock and sector. However, by building my stake and investing lump sums over the next few years, I could get there.

I can spy a buying opportunity today, because Taylor Wimpey shares have dropped 5% in the last week. While they’re a bit pricey, I’m optimistic about their prospects.

Once this week’s Budget is out of the way, we’ll have a clear review of where the economy is going. If the Bank of England starts cutting interest rates, that could lift the housing market. It will also make high-yielding shares like this one look ever more attractive, as savings rates and bond yields fall.

As with any stock, there are risks. Investors may be banking on Labour boosting construction, but in my view, it’ll struggle to hit its target of 1.5m homes in five years.

Another risk is that interest rates could stay higher than expected, squeezing buyers out. Dividends aren’t guaranteed so I may not get the income I’m hoping for.

Yet I plan to stay invested for years and hope that one day I’ll hit my £100 monthly income target as Taylor Wimpey dividends rise. Time to buy more.