PulteGroup Announces Dividend Hike, Boost Shareholders' Value

As a shareholder-friendly measure, PulteGroup, Inc. (NYSE:PHM) announced a hike in its quarterly dividend payout. With this payout, the company has raised its quarterly dividend by 33% in the past 12 months, which indicates its intention to utilize free cash for boosting shareholders’ returns.

The company declared a 9% hike in its quarterly dividend. PulteGroup raised quarterly dividend to 12 cents a share (or 48 cents annually) from the previous payout of 11 cents (or 44 cents annually). The increased dividend will be paid out on Jan 3, 2020 to its shareholders on record as of Dec 18, 2019.

Notably, dividend hikes also raise the market value of the stock. The same can be noticed as shares of the company have moved up more than 2%, during the market trading hours on Dec 5, 2019.

What’s Driving the Dividend Policy?

PulteGroup’s business has been benefiting from higher demand owing to favorable housing dynamics backed by lower interest rates and improved affordability. Owing to these tailwinds, the company reported adjusted earnings per share of $1.01 in third-quarter 2019, beating the Zacks Consensus Estimate of 92 cents by 9.8%.

Importantly, orders increased 13% year over year in the quarter owing to higher demand. Precisely, its focus on entry-level buyers is commendable, considering the ongoing market dynamics. The company witnessed 39% rise in orders from first-time buyers.

Also, PulteGroup has been actively managing cash flows and returning much of its free cash to investors through share repurchases as well as dividends. During third-quarter 2019, the company returned $166 million to its shareholders through share repurchases and dividends, after investing $700 million in the business. This brings the total return to its shareholders to $340 million in the first nine months of 2019.

Boosting the dividend payout indicates the company’s inherent strength of operating and financial results. They are also in line with the company’s efforts to boost long-term value for shareholders.

Moreover, shares of PulteGroup have surged 54.7% year to date compared with the Zacks Building Products - Home Builders industry's 53.7% rally.

Zacks Rank & Other Key Picks

Currently, PulteGroup currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the same industry are M/I Homes, Inc (NYSE:MHO) , Meritage Homes Corporation (NYSE:MTH) and D.R. Horton, Inc (NYSE:DHI) . M/I Homes and Meritage Homes sport a Zacks Rank #1, whereas D.R. Horton carries a Zacks Rank #2 (Buy).

M/I Homes’ current year earnings are expected to rise 31.9%.

Meritage Homes surpassed estimates in all of the trailing four quarters, the average being 19.2%.

D.R. Horton has three-five year expected earnings per share growth rate of 11%.

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