Understanding the Sustainability and Future Potential of Toll Brothers Inc's Dividends
Toll Brothers Inc (TOL, Financial) recently announced a dividend of $0.21 per share, payable on 2023-10-20, with the ex-dividend date set for 2023-10-05. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Toll Brothers Inc's dividend performance and assess its sustainability.
A Brief Introduction to Toll Brothers Inc
Toll Brothers Inc is the leading luxury homebuilder in the United States with an average sale price well above public competitors'. The company operates in over 60 markets across 24 states and caters to move-up, active-adult, and second-home buyers. Traditional homebuilding operations represent most of the company's revenue. Toll Brothers also builds luxury for-sale and for-rent properties in urban centers across the U.S. It has its headquarters in Horsham, Pennsylvania.
Tracing Toll Brothers Inc's Dividend History
Toll Brothers Inc has maintained a consistent dividend payment record since 2017. Dividends are currently distributed on a quarterly basis. Below is a chart showing annual Dividends Per Share for tracking historical trends.
Unpacking Toll Brothers Inc's Dividend Yield and Growth
As of today, Toll Brothers Inc currently has a 12-month trailing dividend yield of 1.16% and a 12-month forward dividend yield of 1.17%. This suggests an expectation of increase dividend payments over the next 12 months.
Over the past three years, Toll Brothers Inc's annual dividend growth rate was 20.50%. Extended to a five-year horizon, this rate increased to 22.40% per year. Based on Toll Brothers Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Toll Brothers Inc stock as of today is approximately 3.19%.
Assessing Dividend Sustainability: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-07-31, Toll Brothers Inc's dividend payout ratio is 0.06.
Toll Brothers Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Toll Brothers Inc's profitability 10 out of 10 as of 2023-07-31, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Probing into Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Toll Brothers Inc's growth rank of 10 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Toll Brothers Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Toll Brothers Inc's revenue has increased by approximately 20.90% per year on average, a rate that outperforms than approximately 79.21% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Toll Brothers Inc's earnings increased by approximately 39.30% per year on average, a rate that outperforms than approximately 69.32% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 21.90%, which outperforms than approximately 61.76% of global competitors.
Conclusion: A Promising Dividend Prospect
In conclusion, Toll Brothers Inc's consistent dividend payments, impressive growth rate, low payout ratio, high profitability, and robust growth metrics make it a promising prospect for dividend investors. The company's strong financial performance and growth trajectory suggest a sustainable dividend policy in the foreseeable future. However, as with any investment, it's crucial to conduct thorough research and consider the company's overall financial health before making a decision.
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