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.
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.
Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.
The article Building Out Your Portfolio originally appeared on Fool.com.
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