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Lennar Doubles Annual Dividend, Bolsters Stockholder Value
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Lennar Corporation (LEN - Free Report) announced a 100% annual cash dividend hike to $1.00 per share from 50 cents in a bid to impress investors. The increase will result in a quarterly cash dividend of 25 cents per share for both Class A and Class B common stock, payable on Oct 30 to shareholders of record as of Oct 16, 2020.
This hike is reflective of the homebuilder’s focus on operational excellence and cash flow. Earlier, its board approved a 213% increase in the annual dividend rate to 50 cents per share from 16 cents on Jan 9.
Notably, this leading homebuilder has been paying dividend over the past two decades. The company has a consistent track record of maintaining stockholder returns. It paid a dividend of $51.5 million in fiscal 2019, $49.2 million in fiscal 2018 and $37.6 million in fiscal 2017. In the first nine months of fiscal 2020, it returned $117.1 million to shareholders in the form of dividend.
What’s Driving the Dividend Policy?
Lennar’s business has been benefiting from solid demand for new homes, which is reflective of healthy housing market fundamentals stemming from lower rates, work-from-home trends and low supply of home inventory.
Recently, Lennar reported solid third-quarter fiscal 2020 results. The company’s quarterly earnings and revenues surpassed the Zacks Consensus Estimate by 40.4% and 10.1%, respectively. Also, the metrics jumped 33.3% and 0.2%, respectively, from the year-ago level. The upside was mainly driven by solid execution of homebuilding and financial services businesses. Also, effective cost control and focus on making its homebuilding platform more efficient — which in turn resulted in higher operating leverage — added to the bliss.
New orders in the quarter increased 16% from the year-ago period to 15,564 homes. Potential value of net orders also increased 20% year over year to $6.3 billion.
Moreover, focus on land lighter strategy is enhancing free cash generation, which is being used by Lennar to bolster the balance sheet, thereby mitigating risk and enabling it to opportunistically buy back shares, in turn boosting returns. The company expects to continue generating strong cash flow, and intends to utilize the cash to pay down debt and return capital to shareholders while improving the balance sheet.
Lennar has gained 50.3%, outperforming the industry’s 35.8% rally so far this year. Earnings estimates for fiscal 2020 have moved 12.3% upward over the past 30 days, indicating a 25.4% year-over-year improvement. The upside can primarily be attributable to a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in 13 of the trailing 15 quarters.
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Lennar Doubles Annual Dividend, Bolsters Stockholder Value
Lennar Corporation (LEN - Free Report) announced a 100% annual cash dividend hike to $1.00 per share from 50 cents in a bid to impress investors. The increase will result in a quarterly cash dividend of 25 cents per share for both Class A and Class B common stock, payable on Oct 30 to shareholders of record as of Oct 16, 2020.
This hike is reflective of the homebuilder’s focus on operational excellence and cash flow. Earlier, its board approved a 213% increase in the annual dividend rate to 50 cents per share from 16 cents on Jan 9.
Notably, this leading homebuilder has been paying dividend over the past two decades. The company has a consistent track record of maintaining stockholder returns. It paid a dividend of $51.5 million in fiscal 2019, $49.2 million in fiscal 2018 and $37.6 million in fiscal 2017. In the first nine months of fiscal 2020, it returned $117.1 million to shareholders in the form of dividend.
What’s Driving the Dividend Policy?
Lennar’s business has been benefiting from solid demand for new homes, which is reflective of healthy housing market fundamentals stemming from lower rates, work-from-home trends and low supply of home inventory.
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Recently, Lennar reported solid third-quarter fiscal 2020 results. The company’s quarterly earnings and revenues surpassed the Zacks Consensus Estimate by 40.4% and 10.1%, respectively. Also, the metrics jumped 33.3% and 0.2%, respectively, from the year-ago level. The upside was mainly driven by solid execution of homebuilding and financial services businesses. Also, effective cost control and focus on making its homebuilding platform more efficient — which in turn resulted in higher operating leverage — added to the bliss.
New orders in the quarter increased 16% from the year-ago period to 15,564 homes. Potential value of net orders also increased 20% year over year to $6.3 billion.
Moreover, focus on land lighter strategy is enhancing free cash generation, which is being used by Lennar to bolster the balance sheet, thereby mitigating risk and enabling it to opportunistically buy back shares, in turn boosting returns. The company expects to continue generating strong cash flow, and intends to utilize the cash to pay down debt and return capital to shareholders while improving the balance sheet.
Lennar has gained 50.3%, outperforming the industry’s 35.8% rally so far this year. Earnings estimates for fiscal 2020 have moved 12.3% upward over the past 30 days, indicating a 25.4% year-over-year improvement. The upside can primarily be attributable to a solid earnings surprise history, having surpassed the Zacks Consensus Estimate in 13 of the trailing 15 quarters.
Zacks Rank
Lennar currently carries a Zacks Rank #1 (Strong Buy). It shares space with KB Home (KBH - Free Report) , Meritage Homes Corporation (MTH - Free Report) and Toll Brothers, Inc. (TOL - Free Report) in the same industry, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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