M.D.C. Holdings Inc's Dividend Analysis
Assessing M.D.C. Holdings Inc's Dividend Sustainability and Growth Prospects
M.D.C. Holdings Inc (NYSE:MDC) recently announced a dividend of $0.55 per share, payable on 2024-02-21, with the ex-dividend date set for 2024-02-06. 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 M.D.C. Holdings Inc's dividend performance and assess its sustainability.
What Does M.D.C. Holdings Inc Do?
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M.D.C. Holdings Inc is an American holding company that operates home construction, mortgage, insurance, and title companies. The company focuses on single-family and residential communities via its Richmond American Homes brand in Arizona, California, Colorado, Florida, Virginia, Nevada, Utah, and Washington. MDC Holdings constructs homes for first-time and move-up homebuyers. Its segments include Homebuilding and Financial Services. Its Home construction in Colorado, California, Washington, and Arizona derive most of the company's homebuilding revenue, followed by Utah, and Virginia.
A Glimpse at M.D.C. Holdings Inc's Dividend History
M.D.C. Holdings Inc has maintained a consistent dividend payment record since 2014. Dividends are currently distributed on a quarterly basis. M.D.C. Holdings Inc has increased its dividend each year since 2014. 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 10 years. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Breaking Down M.D.C. Holdings Inc's Dividend Yield and Growth
As of today, M.D.C. Holdings Inc currently has a 12-month trailing dividend yield of 3.35% and a 12-month forward dividend yield of 3.43%. This suggests an expectation of increased dividend payments over the next 12 months. Over the past three years, M.D.C. Holdings Inc's annual dividend growth rate was 17.70%. Extended to a five-year horizon, this rate decreased to 17.50% per year. Based on M.D.C. Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of M.D.C. Holdings Inc stock as of today is approximately 7.50%.
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 2023-12-31, M.D.C. Holdings Inc's dividend payout ratio is 0.40. M.D.C. Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks M.D.C. Holdings Inc's profitability 9 out of 10 as of 2023-12-31, suggesting good profitability prospects. The company has reported positive net income for each 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. M.D.C. Holdings Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors. Revenue is the lifeblood of any company, and M.D.C. Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. M.D.C. Holdings Inc's revenue has increased by approximately 3.70% per year on average, a rate that underperforms approximately 66% 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, M.D.C. Holdings Inc's earnings increased by approximately 0.20% per year on average, a rate that underperforms approximately 70.11% of global competitors. Lastly, the company's 5-year EBITDA growth rate of 17.10%, which underperforms approximately 42.65% of global competitors.
Next Steps
In conclusion, the dividend profile of M.D.C. Holdings Inc appears robust, with a history of consistent increases and a payout ratio that suggests a balance between rewarding shareholders and retaining earnings for growth. The company's strong profitability rank supports the sustainability of its dividend payments. However, investors should also consider the mixed growth metrics, as the company's revenue growth underperforms a majority of its global competitors, and its EPS growth rate suggests potential challenges ahead. Given these factors, value investors may want to keep a close eye on M.D.C. Holdings Inc's financial health and market position while enjoying the dividends it offers. Will M.D.C. Holdings Inc continue to build on its dividend achiever status, or could industry trends and financial performance impact its ability to sustain dividend growth? GuruFocus Premium users can screen for high-dividend yield stocks using the High Dividend Yield Screener to find more opportunities like M.D.C. Holdings Inc.
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.
