PulteGroup, Inc. (PHM - Free Report) declared a 22% hike in its quarterly dividend to 11 cents per share from 9 cents. The dividend is payable on Jan 3, 2019, to shareholders on record as of Dec 18.
Notably, the company has raised its dividend after three years. In fact, the company had bumped up its dividend by 12.5% to 9 cents way back in fourth-quarter 2015. The dividend yield, based on the new payout and the last closing market price, is approximately 1.7% in comparison to the previous payout’s 1.4%.
The move underscores the company’s commitment to reward and create long-term value for shareholders. Following the news, the company’s shares jumped 3.9% on Dec 6.
Efforts to Return More to Shareholders Bode Well
The hike in dividend was primarily driven by strong balance sheet and cash flow generation. It reflects the company’s consistency in its capital allocation priorities.
In the third quarter of 2018, PulteGroup paid $93 million to shareholders through dividends and share repurchases, reaching the year-to-date total to more than $250 million. Out of the total, 2.4 million common shares were repurchased for $67 million in the quarter.
Also, cash and cash equivalents were $728.6 million in the quarter, up from $272.7 million at the end of 2017. In fact, the company expects to generate between $1 billion and $1.2 billion of cash flow in 2018 versus $900 million expected earlier.
Share Price Performance
PulteGroup’s shares have declined 19.8% compared with the industry’s decline of 32.1% so far this year. While concerns surrounding affordability and rising mortgage rates have been plaguing the industry, PulteGroup is positive about traffic trends that indicate higher inclination of buyers.
Zacks Rank & Stocks to Consider
PulteGroup currently carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the Construction sector are Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , Altair Engineering Inc. (ALTR - Free Report) and EMCOR Group, Inc. (EME - Free Report) . While Great Lakes sports a Zacks Rank #1 (Strong Buy), Altair Engineering and EMCOR carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Great Lakes’ 2018 earnings are expected to increase 111.1%.
Altair Engineering has an expected earnings growth rate of 23.1% for the current year.
EMCOR has a projected earnings growth rate of 20% for the current year.
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