PulteGroup, Inc. (PHM), Lennar Corporation (LEN): Building Out Your Portfolio

Another major homebuilder is D.R. Horton, Inc. (NYSE:DHI), which also pays out a $0.15 quarterly dividend, a 0.77% dividend yield. Sales were up an impressive 24% in 2012, and are expected to be up an impressive 44% this year.

The company focuses on homes in the $100,000 to $600,000 price range, where the average selling price in fiscal 3Q was up 15% year-over-year. For 3Q, EPS came in at $0.42 compared to consensus of $0.34. As well, orders were up 12% year-over-year.

D.R. Horton, Inc. (NYSE:DHI), like Lennar Corporation (NYSE:LEN), also has a solid inventory of land, spending nearly $1 billion last quarter on land. Prior to the financial crisis, D.R. focused on first-time home buyers, yet, it’s transitioning to move-up buyers. First-time home buyers now only account for 47% of D.R.’s closings.

Bottom line

In a rebounding industry, I think the best play is the industry leader, PulteGroup, Inc. (NYSE:PHM). The company gets around one-third of its revenue from the retirement community, which should be a big benefactor of the aging population. Meanwhile, both Lennar Corporation (NYSE:LEN) and D.R. Horton, Inc. (NYSE:DHI) could be solid investments given their significant land positions and broad geographic diversity. But PulteGroup is the cheapest on a P/E basis at 16.3 times earnings, compared to D.R.’s 19.4 times and Lennar’s 33.5 times.

The article Building Out Your Portfolio originally appeared on Fool.com.

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