Is DHI a good stock to buy? We hold the DR Horton, Inc. passive income portfolio substack. In this article we will summarize the Bills articles on DHI. DR Horton Inc. Shares were trading at $139.04 as of March 12. DHI’s trailing and forward P/E were 12.98 and 13.09, respectively, according to Yahoo Finance.
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DR Horton, Inc. Serves as a homebuilding company in the Eastern, Northern, Southeast, South Central, Southwest, and Northwest regions of the United States. DHI has been highlighted as a compelling shareholder builder under its “Safety Lean” strategy, which focuses on companies with low payout ratios and strong cash generation that can consistently grow dividends over the long term.
While many investors shy away from homebuilders due to the cyclicality associated with interest rates and housing demand, DR Horton has differentiated itself by industrializing the homebuilding process and focusing primarily on entry-level homes, a segment where demand continues to significantly outstrip supply.
This position enables the company to maintain strong sales volume and cash generation even during uncertain housing cycles. The company’s financial profile further strengthens the investment case, particularly its ability to generate significant free cash flow.
In fiscal 2024, DR Horton generated more than $2 billion in operating cash flow, allowing the company to comfortably finance dividends without relying on debt or financial engineering. Its dividend policy remains very conservative, with a payout ratio of around 11%, meaning only a small portion of earnings and cash is currently distributed to shareholders.
The balance sheet is also evident in the capital-intensive housing industry, with net debt to EBITDA of approximately 0.46x and the absence of significant near-term maturities that could put pressure on liquidity.
This financial flexibility allows the company to continue to invest in growth while returning capital to shareholders. DR Horton has recently shown its confidence in its financial strength by increasing its dividend by 33%. Given the extremely low payout ratio, the company has considerable room to continue raising the dividend at a double-digit pace for several years while still maintaining a conservative payout profile, creating a long-term dividend growth opportunity.
Previously, we covered a Fast article At DR Horton, Inc. (DHI) by Let it Compound in May 2025, which highlighted the company’s robust US housing scale, decentralized operating model, capital-efficient land strategy, and strong long-term compounding support. DHI’s stock price has risen approximately 10.57% since our coverage. The Passive Income Portfolio shares a similar view but emphasizes DHI’s low payout ratio, strong free cash flow, and long path to dividend growth.
