PulteGroup, Inc. (NYSE:PHM) will increase its dividend from last year's comparable payment on the 3rd of January to $0.20. Although the dividend is now higher, the yield is only 0.9%, which is below the industry average.
See our latest analysis for PulteGroup
PulteGroup's Dividend Is Well Covered By Earnings
The dividend yield is a little bit low, but sustainability of the payments is also an important part of evaluating an income stock. However, PulteGroup's earnings easily cover the dividend. As a result, a large proportion of what it earned was being reinvested back into the business.
Looking forward, earnings per share is forecast to fall by 0.4% over the next year. If the dividend continues along recent trends, we estimate the payout ratio could be 6.0%, which we consider to be quite comfortable, with most of the company's earnings left over to grow the business in the future.
PulteGroup Has A Solid Track Record
The company has an extended history of paying stable dividends. The dividend has gone from an annual total of $0.20 in 2013 to the most recent total annual payment of $0.80. This works out to be a compound annual growth rate (CAGR) of approximately 15% a year over that time. It is good to see that there has been strong dividend growth, and that there haven't been any cuts for a long time.
The Dividend Looks Likely To Grow
The company's investors will be pleased to have been receiving dividend income for some time. PulteGroup has seen EPS rising for the last five years, at 34% per annum. Earnings have been growing rapidly, and with a low payout ratio we think that the company could turn out to be a great dividend stock.
PulteGroup Looks Like A Great Dividend Stock
Overall, a dividend increase is always good, and we think that PulteGroup is a strong income stock thanks to its track record and growing earnings. The earnings easily cover the company's distributions, and the company is generating plenty of cash. However, it is worth noting that the earnings are expected to fall over the next year, which may not change the long term outlook, but could affect the dividend payment in the next 12 months. Taking this all into consideration, this looks like it could be a good dividend opportunity.
It's important to note that companies having a consistent dividend policy will generate greater investor confidence than those having an erratic one. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 1 warning sign for PulteGroup that you should be aware of before investing. Is PulteGroup not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
About NYSE:PHM
PulteGroup
Through its subsidiaries, primarily engages in the homebuilding business in the United States.
Flawless balance sheet and undervalued.
