Shares in Taylor Wimpey were 4.7% higher at 193.60p on news it would pay a Â£300m special dividend in July 2017 and increase its ordinary dividend.
It added the market for new homes remained "very positive" and it was "on track to deliver good progress".
At close, the FTSE 100 index was 16.37 points, or 0.27%, higher at 6,167.77.
Shares in Vodafone climbed 1.5% to 227.00p as investors welcomed the latest results from the mobile phone giant.
Vodafone said its underlying business was now growing for the first time since 2008, and reported a 2.7% increase in full-year earnings to Â£11.6bn.
On the currency markets, the pound rose sharply in early trade before giving up some of the gains  after figures from the Office for National Statistics showed the inflation rate fell to 0.3% in April, down from 0.5% in March.
At midday, the pound was up 0.56% against the dollar at $1.4483, and was also 0.41% higher against the euro at â‚¬1.2774.
(Close): Shares in Taylor Wimpey helped to lift the FTSE 100 after the housebuilder announced plans for a special dividend.