In this article, we discuss 5 best GARP stocks that pay dividends. If you want to read our detailed analysis of GARP investment and the performance of these stocks over the years, go directly to read 10 Best GARP Stocks That Pay Dividends.
5. D.R. Horton, Inc. (NYSE:DHI)
Number of Hedge Fund Holders: 46
P/E Ratio as of June 14: 7.67
Estimated EPS Growth for FY23: 11.16%
D.R. Horton, Inc. (NYSE:DHI) is a Texas-based home construction company that is one of the largest homebuilders in the country by volume. It is one of the best GARP stocks on our list with a P/E ratio of 46 and estimated EPS growth of 11.16%. Moreover, the company’s EPS has shown a 43.2% growth in the past five years.
D.R. Horton, Inc. (NYSE:DHI) is also a strong dividend payer as the company holds a 10-year streak of dividend growth. It currently pays a quarterly dividend of $0.25 per share for a dividend yield of 0.87%, as recorded on June 14.
In May, Deutsche Bank initiated its coverage on the stock with a Buy rating and a $150 price target, appreciating the company’s strong sales momentum.
D.R. Horton, Inc. (NYSE:DHI) was a part of 46 hedge fund portfolios in Q1 2023, the same as in the previous quarter, according to Insider Monkey’s database. The stakes owned by these hedge funds have a total value of over $1.3 billion.
Third Avenue Management mentioned D.R. Horton, Inc. (NYSE:DHI) in its Q1 2023 investor letter. Here is what the firm has to say:
“The primary contributors to performance during the quarter included the Fund’s investments in leading US-based homebuilders (Lennar Corp. and D.R. Horton, Inc. (NYSE:DHI)), UK-centric real estate holdings (Berkeley Group and Savills plc), and Industrial and Logistics REITs (Prologis, First Industrial and Segro plc).
The Fund’s other activity during the period was modest in nature and included slight reductions to certain holdings for portfolio management purposes (Lennar Corp., D.R. Horton, FNF Group, Wharf Holdings, and AMH).
After factoring in this activity, the Fund had 41% of its capital invested in Residential Real Estate companies with strong ties to the U.S. and U.K. residential markets—where there remain supply deficits after years of under-building. In conjunction with near record-low inventory levels, there also remains significant demand for new products at affordable price points (both for-sale and for-rent). Therefore, these Fund holdings seem positioned to benefit from a multi-year recovery in residential construction and ancillary activities, particularly as mortgage rates stabilize for conforming loans. At the end of the quarter, these holdings included a diversified set of businesses including homebuilding (Lennar Group and DR Horton), timberland ownership and management (Weyerhaeuser and Rayonier), planned development (Berkeley Group and Five Point Holdings), the ownership and development of rental properties (AMH, Grainger plc, and Ingenia Communities), as well as other ancillary businesses (Lowe’s and Trinity Place Holdings).”