3/8/25

D.R. Horton is a major player in the homebuilding industry, consistently ranking among the top builders in the U.S. The company has built a strong reputation by catering to a wide range of homebuyers, from first-time buyers to those looking for high-end properties. As one of the largest residential construction companies, D.R. Horton benefits from its scale, strong demand in key housing markets, and a well-managed balance sheet.

For dividend investors, this stock might not be the first to come to mind, but it’s worth a closer look. While it doesn’t offer an exceptionally high yield, it does deliver consistent dividend growth backed by solid financials. If you’re an investor focused on steady income with room for long-term growth, D.R. Horton has some appealing qualities.

Key Dividend Metrics

💰 Dividend Yield: 1.19% (Forward), 0.97% (Trailing)
📈 5-Year Average Dividend Yield: 0.95%
🏆 Payout Ratio: 9.20% (Very low, allowing room for reinvestment)
🔁 Dividend Growth: Over 23% annualized in the last five years
📅 Recent Dividend Increase: Announced for 2025
💵 Dividend Per Share: $1.60 (Forward)
⏳ Ex-Dividend Date: February 7, 2025
📊 Dividend Payment Date: February 14, 2025

Dividend Overview

D.R. Horton isn’t a high-yield dividend stock, but that doesn’t mean it lacks value for income investors. The forward dividend yield sits at 1.19%, which is lower than many traditional dividend-paying companies. However, what it lacks in yield, it makes up for in growth.

Dividend growth has been substantial, with payouts increasing at an annualized rate of more than 23% over the past five years. The company recently announced another increase for 2025, reinforcing management’s confidence in its earnings power.

One of the most reassuring aspects of D.R. Horton’s dividend is the payout ratio of just 9.20%. That means the company is using only a small fraction of its earnings to pay dividends, leaving plenty of room for reinvestment, acquisitions, and share buybacks. This is a big plus for investors looking for a safe and sustainable dividend, even in an industry as cyclical as homebuilding.

Dividend Growth and Safety

Steady Increases

D.R. Horton has consistently raised its dividend over the years, and the rate of increase has been impressive. While its yield may not be eye-catching at first glance, the company has quadrupled its dividend payments in just five years. That kind of rapid dividend growth is hard to find, particularly in the homebuilding sector.

Strong Coverage

A key reason this stock stands out is how easily its earnings cover its dividend payments. The payout ratio is so low that even in a housing market slowdown, the company would likely have no issue continuing its dividend streak.

Beyond that, the company is generating healthy free cash flow, with $4.54 billion in levered free cash flow over the past year. Strong cash flow means the dividend isn’t just sustainable—it has room to keep growing.

Chart Analysis

Price Action and Moving Averages

The chart for D.R. Horton (DHI) shows a significant decline from its peak, with the stock now trading well below both the 50-day and 200-day moving averages. The 50-day moving average has been trending downward for several months, reflecting a sustained period of weakness. Meanwhile, the 200-day moving average has also started to slope downward, signaling a more prolonged bearish trend.

There was a period of strength in the middle of last year, with prices climbing sharply above both moving averages. However, the stock failed to maintain those levels, and a breakdown in the fourth quarter led to a deep selloff. The recent price action suggests some stabilization, but the stock remains in a vulnerable technical position.

Volume Trends

Volume has been elevated during key turning points, particularly during the sharp drop in November and subsequent selloffs in December and January. The largest volume spikes have come on red bars, indicating heavy selling pressure. This suggests institutional investors may have been offloading shares during the decline.

Recently, volume has started to taper off slightly, which could indicate indecision in the market. A pickup in green bars, especially on high volume, would be a more constructive sign that buying interest is returning.

Relative Strength Index (RSI)

The RSI is currently at 54, indicating neutral momentum. The indicator was in oversold territory earlier this year, which coincided with the recent bounce off the lows. However, RSI has yet to push into strong bullish territory, suggesting that while selling pressure has eased, buyers have not yet taken control.

If RSI moves above 60, it would suggest that momentum is shifting in favor of the bulls. Conversely, if it rolls over from current levels, it could signal another leg lower.

Recent Candlestick Behavior

The last few candles show some attempts at recovery, but the wicks on the tops of recent bars suggest that sellers are still active at higher prices. The stock tested the $135-$140 range but struggled to hold above it. This could indicate that resistance is forming around that level.

A strong close above $140 with volume would be a better sign of strength. If the stock fails to reclaim that level soon, there’s a risk that short-term traders may take profits, leading to another pullback.

Analyst Ratings

📈 Recent Upgrades

In early March 2025, Seaport Global Securities revised its outlook on D.R. Horton, upgrading the stock from a neutral stance to a buy recommendation. This shift reflects increased confidence in the company’s ability to navigate current market conditions and sustain its growth trajectory. The upgrade was driven by stronger-than-expected housing demand, improved supply chain conditions, and the company’s ability to maintain solid margins despite a fluctuating interest rate environment. Analysts also pointed to D.R. Horton’s balance sheet strength and continued focus on expanding in high-growth regions.

📉 Recent Downgrades

On the other hand, in December 2024, JPMorgan Chase & Co. adjusted its rating for D.R. Horton, moving the stock from neutral to underweight. Along with the downgrade, the firm reduced its price target from $188 to $156. The change was largely influenced by concerns over rising mortgage rates, potential affordability issues in the housing market, and signs of a slowdown in new home sales. Analysts expressed caution about how prolonged high borrowing costs could impact homebuyer sentiment and, in turn, D.R. Horton’s future sales.

🎯 Consensus Price Target

As of the latest evaluations, the consensus price target for D.R. Horton stands at $166.64, based on insights from 22 analysts. This figure represents the average expected stock price over the next 12 months, reflecting a mix of bullish and bearish perspectives. While some analysts see continued upside potential due to strong housing demand, others remain cautious due to economic headwinds that could weigh on homebuilders.

These recent rating changes offer a glimpse into how analysts view D.R. Horton’s position in the market. While upgrades highlight confidence in its resilience, downgrades reflect the risks associated with an uncertain interest rate environment and broader economic factors.

Earnings Report Summary

D.R. Horton kicked off 2025 with a solid earnings report, posting $2.61 per share in earnings, which came in stronger than many expected. Revenue for the quarter reached $7.6 billion, and the company pulled in $1.1 billion in pre-tax income, holding a 14.6% profit margin despite some headwinds in the housing market.

Even with rising mortgage rates and affordability concerns, the company managed to return $1.2 billion to shareholders through a mix of dividends and stock buybacks. That’s a strong sign that management remains committed to rewarding investors, even while navigating a tricky market.

One challenge the company faced this quarter was a slight slowdown in new home orders. To keep demand strong, D.R. Horton rolled out incentives like mortgage rate buydowns and shifted its focus toward building smaller, more affordable homes. While these moves helped keep buyers engaged, they did put a little pressure on profit margins, which dipped from 23.6% to 22.7%. Looking ahead, the company expects some margin pressure to continue, especially as it works to clear out unsold inventory.

Despite these challenges, D.R. Horton didn’t adjust its full-year outlook. The company is still projecting total revenue between $36 billion and $37.5 billion and expects to close on 90,000 to 92,000 homes by the end of the year. That suggests confidence in its ability to navigate the current environment and maintain strong sales.

Overall, D.R. Horton is proving it can adapt to changing market conditions. It’s balancing growth with profitability while keeping shareholders in mind, making it a company to watch as the housing market continues to evolve.

Financial Health and Stability

Dividend stability depends on a company’s financial foundation, and D.R. Horton checks many of the right boxes.

• Revenue over the last year: $36.69 billion
• Net income: $4.65 billion
• Operating cash flow: $2.99 billion
• Profit margin: 12.69%
• Return on equity: 19.17%

One standout figure is the current ratio of 6.77, which suggests a very strong liquidity position. The company also maintains a low total debt-to-equity ratio of just 20.28%, making it one of the more financially stable homebuilders.

This financial strength gives the company a solid buffer during downturns in the real estate cycle. While some smaller builders struggle when housing demand slows, D.R. Horton has the flexibility to continue investing in land, development, and shareholder returns without stretching its balance sheet.

Valuation and Stock Performance

Current Valuation

• Trailing P/E Ratio: 9.48
• Forward P/E Ratio: 10.39
• Price-to-Book Ratio: 1.69
• PEG Ratio (5-Year Expected): 0.53

D.R. Horton’s valuation looks attractive compared to both the broader market and other homebuilders. A price-to-earnings ratio under 10 suggests the stock is trading at a discount relative to its earnings power. Additionally, the PEG ratio of 0.53 indicates that when factoring in growth expectations, the stock may be undervalued.

Stock Movement

• 52-Week High: $199.85
• 52-Week Low: $124.23
• Current Price: $133.42
• 50-Day Moving Average: $136.61
• 200-Day Moving Average: $159.78

The stock is down considerably from its 52-week high, trading roughly 33% below its peak. This pullback could present an opportunity for long-term investors, particularly those looking for a balance of dividend growth and capital appreciation.

Risks and Considerations

Housing Market Cycles

The homebuilding industry is highly cyclical, meaning it tends to perform well during economic expansions but can slow dramatically when interest rates rise or consumer demand weakens. With mortgage rates fluctuating and affordability concerns growing, this could impact future sales growth.

Rising Costs

D.R. Horton faces the same challenges as other builders when it comes to rising material and labor costs. While the company has managed costs well in recent years, persistent inflation in construction-related expenses could put pressure on margins.

Economic Uncertainty

A slowdown in consumer spending or broader economic weakness could affect housing demand, making earnings more volatile. That said, the company’s diversified offerings and strong financial position help mitigate some of these risks.

Lower Yield Compared to Alternatives

For investors who prioritize high dividend yields, D.R. Horton may not be the best choice. At 1.19%, its yield is lower than other income-focused investments like REITs or utilities. However, for those looking for growth in dividend payouts and capital appreciation, DHI has some strong points in its favor.

Final Thoughts

D.R. Horton presents an interesting case for investors who appreciate dividend growth, financial strength, and long-term stability. While it doesn’t offer the high yields that some dividend seekers prefer, its low payout ratio and history of aggressive dividend increases make it an attractive option for those focused on safety and steady growth.

The stock’s recent pullback could offer a better entry point for long-term investors who believe in the company’s ability to navigate market cycles. For those who can tolerate some volatility and are willing to prioritize total return over upfront yield, D.R. Horton remains a solid dividend growth stock in the homebuilding sector.