Raised for years and barely dents cash flow — graded warn only because the yield is under 1%. PulteGroup pays $0.26 a quarter, $1.04 annualized, raised 18% in late 2025 from $0.22, with increases every year since 2017. Annualized dividends of about $218 million are about 10% of 2025 free cash flow of $2,105 million, a pass, and the balance sheet holds $1,613 million of cash against negligible debt, a pass. The single caution is the 0.84% trailing yield, under the 1% income line, so the card grades warn as a growth holding.
Key risk: Homebuilding is cyclical: a housing downturn cuts closings and cash flow sharply, and the dividend, though small against cash flow today, has no contractual protection.
Changes if: The trailing yield rises above 1%, or free-cash-flow payout crosses 60% in a housing downturn.
- ✓Cash-flow cover About 10% of FY2025 free cash flow on the annualized rate, pass (<60%).
- ✓Leverage Net cash position, pass (<3x).
- ✓Dividend history Raised every year since 2017; no cut in 10 years.
- !Yield / trap review Trailing yield 0.84%, under the 1% line: a growth holding, not income. No trap pattern.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.