PulteGroup (NYSE:PHM) Has Re-Affirmed Its Dividend Of US$0.15

By
Simply Wall St
Published
May 08, 2022
NYSE:PHM
Source: Shutterstock

PulteGroup, Inc. (NYSE:PHM) will pay a dividend of US$0.15 on the 5th of July. This payment means the dividend yield will be 1.4%, which is below the average for the industry.

View our latest analysis for PulteGroup

PulteGroup's Earnings Easily Cover the Distributions

If it is predictable over a long period, even low dividend yields can be attractive. Before making this announcement, PulteGroup was easily earning enough to cover the dividend. This means that most of its earnings are being retained to grow the business.

Over the next year, EPS is forecast to expand by 35.9%. If the dividend continues along recent trends, we estimate the payout ratio will be 5.4%, which is in the range that makes us comfortable with the sustainability of the dividend.

historic-dividend
NYSE:PHM Historic Dividend May 8th 2022

PulteGroup Is Still Building Its Track Record

PulteGroup's dividend has been pretty stable for a little while now, but we will continue to be cautious until it has been demonstrated for a few more years. The dividend has gone from US$0.20 in 2013 to the most recent annual payment of US$0.60. This means that it has been growing its distributions at 13% per annum over that time. PulteGroup has been growing its dividend quite rapidly, which is exciting. However, the short payment history makes us question whether this performance will persist across a full market cycle.

The Dividend Looks Likely To Grow

The company's investors will be pleased to have been receiving dividend income for some time. We are encouraged to see that PulteGroup has grown earnings per share at 37% per year over the past five years. Earnings per share is growing at a solid clip, and the payout ratio is low which we think is an ideal combination in a dividend stock as the company can quite easily raise the dividend in the future.

We Really Like PulteGroup's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. Just as an example, we've come across 3 warning signs for PulteGroup you should be aware of, and 1 of them is concerning. Is PulteGroup not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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