We have been doing a bit of home price monitoring around the old hood in Chicagoland and we can&rsqu...
D.R. Horton: Homebuilding Buy for Value and Growth
03/29/2017 2:50 am EST
Focus: REAL ESTATE
D.R. Horton (DHI) claims the top spot on the Builder 100 — an award given by Builder magazine to recognize the leading home builders across the country; and it’s held that top spot since 2002, asserts Brit Ryle, editor of The Wealth Advisory.
Before the housing bubble burst, the company was growing revenues at an amazing clip. And since 2011, they’ve grown at an average rate of 28% per year since 2011. And that rate should continue well into the future.
When it comes to moving, there’s a sweet spot in the age range. People are most likely to move to a new area between the ages of 18 and 34. After that, they’re pretty likely to stay put.
In fact, after age 25, there’s a precipitous drop in the likelihood of moving somewhere new. So, while that age range makes up only a quarter of the total population, it comprises almost half of the people moving.
So, where are all of these movers moving? Some of the places are pretty standard: New York, California, Chicago, and Washington, D.C. But others might surprise you. Like the Southwest, and the Pacific Northwest.
So, if you want to capture the biggest profits from the resurgence of homebuilding, you’ve got to go where the movers are going. And D.R. Horton has operations and sales in all of the hot new places for millennials.
In addition, DHI is a strong value and income investment. The kind that will keep bringing you profits no matter when this trend comes to an end and no matter what the short-term markets look like.
It trades at a substantial discount to its enterprise value — or takeover value; that’s one of the most important criteria for selecting an income investment.
Plus, it pays a nice dividend of 1.19%. But with cash rolling in and a super-low payout ratio of 13.5%, that’s sure to grow in the near future and keep on growing.
It’s got tons of cash, too — almost $3 for every share out there. And it’s got relatively low debt compared to the rest of the industry.
It’s a great investment in just about any market. So, I’m recommending you set up a position in D.R. Horton common stock before it grows even more.
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