KB Home's Dividend Analysis
Delving Into KB Home's Upcoming Dividend and Historical Performance
KB Home (NYSE:KBH) recently announced a dividend of $0.2 per share, payable on 2024-02-22, with the ex-dividend date set for 2024-02-07. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's look into KB Home's dividend performance and assess its sustainability.
What Does KB Home Do?
This Powerful Chart Made Peter Lynch 29% A Year For 13 Years
How to calculate the intrinsic value of a stock?
KB Home is an American construction company that focuses on residential construction. The company builds single-family homes and communities across Arizona, California, Colorado, Florida, Nevada, Texas, North Carolina, Idaho and the Washington, D.C., area. KB Home operates in several markets and focuses on first-time and move-up homebuyers. The company follows a built-to-order model that offers personalized homes at attainable prices based on the market location. The company also invests in land acquisition and development to support future building activities and is also engaged in financial services operations which includes providing mortgage banking services through its joint venture with a third party.
A Glimpse at KB Home's Dividend History
KB Home has maintained a consistent dividend payment record since 1986. Dividends are currently distributed on a quarterly basis. KB Home has increased its dividend each year since 2013. The stock is thus listed as a dividend achiever, an honor that is given to companies that have increased their dividend each year for at least the past 11 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down KB Home's Dividend Yield and Growth
As of today, KB Home currently has a 12-month trailing dividend yield of 1.21% and a 12-month forward dividend yield of 1.37%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, KB Home's annual dividend growth rate was 18.60%. Extended to a five-year horizon, this rate increased to 44.80% per year. And over the past decade, KB Home's annual dividends per share growth rate stands at an impressive 26.60%.
Based on KB Home's dividend yield and five-year growth rate, the 5-year yield on cost of KB Home stock as of today is approximately 7.70%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-11-30, KB Home's dividend payout ratio is 0.10.
KB Home's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks KB Home's profitability 9 out of 10 as of 2023-11-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. KB Home's growth rank of 9 out of 10 suggests that the company's growth trajectory is strong relative to its competitors. Revenue is the lifeblood of any company, and KB Home's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. KB Home's revenue has increased by approximately 20.00% per year on average, a rate that outperforms approximately 81% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, KB Home's earnings increased by approximately 31.00% per year on average, a rate that outperforms approximately 72.41% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 37.60%, which outperforms approximately 83.82% of global competitors.
Final Thoughts on KB Home's Dividend Prospects
In conclusion, KB Home's upcoming dividend, consistent historical increases, and robust growth metrics paint a promising picture for value investors. The company's low payout ratio coupled with a high profitability rank indicates a sustainable dividend policy, which is further supported by strong growth in revenue, earnings, and EBITDA. KB Home's commitment to delivering shareholder value through dividends, alongside its solid financial performance, makes it a noteworthy consideration for those seeking income-generating investments. With the potential for continued dividend growth and financial stability, KB Home stands out as an attractive option in the residential construction sector.
GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
This article first appeared on GuruFocus.
