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In a shareholder-friendly measure, Toll Brothers Inc. TOL announced a hike of 54% in its quarterly dividend. This move highlights the company’s sound and stable financial position and its commitment to reward shareholders.
Toll Brothers raised the dividend payout to 17 cents per share (or 68 cents annually) from 11 cents per share (or 44 cents annually). The amount will be paid on Apr 23, 2021, to shareholders of record as of Apr 9.
With respect to this, Douglas C. Yearley, Jr., Chairman and Chief Executive Officer of Toll Brother,. said, “We are committed to profitable and sustainable growth and remain extremely focused on capital efficiency and return on equity. The increase in our dividend demonstrates this commitment to delivering returns to our stockholders.”
Factors Supporting Dividend Hikes
Toll Brothers had started off with paying 8 cents per share (or 32 cents annually) in dividends to shareholders from April 2017 and raised it to 11 cents per share (or 44 cents annually) in April 2018.
The company has been regularly enhancing shareholders’ return through share repurchases and dividends. During 2020 and in the first-quarter of fiscal 2021, the company paid $634.1 million and $174.4 million to repurchase stocks.
Meanwhile, the company ended first-quarter of fiscal 2021 with $950 million of cash and cash equivalent. During 2020, the company generated nearly $1 billion in cash flow from operation. The strong balance sheet and liquidity position guarantee improvement in its business as well as 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.
Shares of the company have gained 23.5% in the past six months compared with the industry’s 4.5% growth. The price performance was backed by an impressive earnings surprise history. The company surpassed earnings estimates in 12 of the trailing 14 quarters. The trend is expected to continue beyond 2021 owing to its focus on affordable luxury offerings, acquisitions and favorable housing momentum.
Zacks Rank & Other Key Picks
Currently, Toll Brothers carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other top-ranked stocks include KB Home KBH, D.R. Horton, Inc. DHI and Lennar Corporation LEN, each carrying a Zacks Rank #2.
KB Homes, D.R. Horton and Lennar’s earnings for the current year are expected to rise 63.3%, 41%, and 11.2%, respectively.
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Toll Brothers Inc. (TOL) : Free Stock Analysis Report
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D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
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