#2 - D.R. Horton (NYSE:DHI)
Cyclical stocks like D.R. Horton Inc. (NYSE: DHI) may not appeal to growth-oriented investors. However, investors shouldn't be quick to overlook that the company is the most geographically diverse homebuilder in the United States. It’s also the largest builder in four of the top five U.S. housing markets and nearly 50% of the over 120 markets in which it operates.
But this homebuilder’s attractive financial picture makes it appealing to dividend investors. Free cash flow is solid, but the year-over-year picture reflects the cyclical nature of the business. For example, for the full year 2024, FCF came in at $2.044 billion. That was 51.4% lower than the $4.2 billion it generated in 2023, which was itself 91% higher than the FCF in 2022.
The cyclicality of its free cash flow doesn’t take away from its dividend that yields 1.25%, which is in line with other construction companies. D.R. Horton has also increased its dividend at an annualized rate of over 16% in the last three years. Plus, it has an attractive payout ratio of around 11.3%, which adds security to investors counting on the dividend for income.
About D.R. Horton
D.R. Horton, Inc operates as a homebuilding company in East, North, Southeast, South Central, Southwest, and Northwest regions in the United States. It engages in the acquisition and development of land; and construction and sale of residential homes in 118 markets across 33 states under the names of D.R.
More- Current Price
- $127.77
- Consensus Rating
- Hold
- Ratings Breakdown
- 6 Buy Ratings, 7 Hold Ratings, 2 Sell Ratings.
- Consensus Price Target
- $170.93 (33.8% Upside)
