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Toll Brothers (TOL) Lures Investors Via 18% Dividend Hike

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Toll Brothers, Inc. (TOL - Free Report) announced a hike in dividend payout, maintaining its commitment to increase stockholder returns. This move highlights the company’s sound and stable financial position and commitment to reward shareholders.

TOL increased its quarterly dividend by 18% to 20 cents per share (80 cents annually) from 17 cents (68 cents annually). This new dividend, approved by the board of directors, will be paid on Apr 22, 2022 to its stockholders of record as of Apr 8. The dividend yield, based on the latest payout and Mar 8 closing market price, is approximately 10%.

Shares of this major homebuilder fell 0.22% in the after-hours trading session on Mar 8.

What’s Driving the Dividend Policy?

Toll Brothers had started off by paying 8 cents per share (or 32 cents annually) in dividends to shareholders from April 2017 and raised it to 17 cents in April 2021.

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The company has been regularly enhancing shareholders’ returns through share repurchases and dividends. During fiscal 2021 and first-quarter fiscal 2022, TOL paid $76.6 million and $21.08 million as dividends, respectively.

Meanwhile, the company ended first-quarter fiscal 2022 with $671.4 million of cash and cash equivalents. During fiscal 2021, TOL generated nearly $1.3 billion in cash flow from operations. A strong balance sheet and liquidity position guarantee an improvement in its business and return on equity.

Investors always prefer a return-generating stock. Hence, a high-dividend-yielding one is much coveted. It goes without saying that stockholders are always on the lookout for companies with a track record of consistent and incremental dividend payments.

TOL’s stock has declined 14.8% compared with the industry’s 7.8% decline in the past year. The company has been witnessing supply-chain bottlenecks and rising material and labor costs.

Nonetheless, the recent move is likely to impress investors and boost price performance. Earnings estimates for fiscal 2022 have moved 0.7% upward over the past 30 days to $10.01 per share, indicating a 51% year-over-year increase.

Zacks Rank & Key Picks

Currently, Toll Brothers carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Century Communities, Inc. (CCS - Free Report) : This Zacks Rank #1 homebuilder banks on strong demand for affordable new homes and the strength of its competitive positioning and national footprint across 30 high-growth markets. CCS is optimistic about its online homebuying brand and expects Century Complete, which is 100% entry-level focused, to be the primary driver of organic growth in 2022 and beyond.

Century Communities’ earnings are expected to rise 19.1% year over year in 2022.

D.R. Horton (DHI - Free Report) : This leading homebuilder currently sports a Zacks Rank #1. This Texas-based prime homebuilder continues to gain from industry-leading market share, a solid acquisition strategy, a well-stocked supply of land, lots, and homes along with affordable product offerings across multiple brands.

D.R. Horton’s earnings are expected to rise 38.5% year over year in fiscal 2022.

KB Home (KBH - Free Report) : This Los Angeles, CA-based homebuilder is well positioned, given a robust backlog level, a strong lineup of community openings and a solid return-focused growth model. With resilient U.S. housing market momentum, backlog value at fiscal fourth quarter-end grew 67% from a year ago to $4.95 billion, marking the highest fourth-quarter level since 2005.

Earnings for KB Home — currently sporting a Zacks Rank #1 — are expected to grow 67.9% in fiscal 2022.


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