Meritage Homes Increases Quarterly Cash Dividend and Renews Programmatic Share Repurchase Strategy

Rhea-AI Summary

Meritage Homes (NYSE: MTH) has announced two significant shareholder-focused initiatives. First, the company increased its quarterly cash dividend to $0.43 per share, up from $0.375 in 2024 (adjusted for the recent two-for-one stock split). This dividend will be paid on March 31, 2025, to shareholders of record as of March 17, 2025.

Additionally, Meritage has renewed its programmatic share repurchase plan, committing to repurchase $15 million worth of shares during each quarter of 2025. The company plans to maintain this as an evergreen plan, while remaining opportunistic based on market conditions.

Positive

• Quarterly dividend increased by 14.7% to $0.43 per share
• Commitment to quarterly share repurchases of $15 million
• Implementation of evergreen share repurchase plan indicates long-term commitment to shareholder returns

Negative

• Significant exposure to interest rate risks and mortgage availability challenges
• Facing supply chain constraints and labor shortages
• Multiple operational risks including materials cost increases and potential cancellation rates

Insights

Financial Analyst

The dual announcement of a 14.7% dividend increase and establishment of an evergreen share repurchase program signals a strategic shift in Meritage Homes' capital allocation framework. The dividend raise to $0.43 per share quarterly is particularly noteworthy given the challenging housing market environment, reflecting management's confidence in sustainable free cash flow generation despite industry headwinds.

The structured approach to share repurchases - committing to $15 million quarterly while maintaining flexibility for opportunistic buying - represents a balanced capital return strategy. While the annual $60 million commitment appears conservative at approximately 1.1% of market capitalization, the 'evergreen' nature of the program provides predictability for investors while preserving financial flexibility for land acquisition and operations.

The timing of these initiatives is strategically significant. By implementing these programs amid housing market uncertainties, Meritage is demonstrating confidence in its operational model focused on entry-level and first move-up homes - segments that typically show more resilience during challenging markets. The company's ability to commit to enhanced shareholder returns while maintaining flexibility for growth investments suggests strong underlying cash flow dynamics and a robust balance sheet.

However, investors should monitor several key factors that could impact the sustainability of these capital return programs:

• Interest rate trajectory and mortgage availability, which directly affect home affordability and sales velocity
• Supply chain dynamics and labor costs, which influence margins and cash flow generation
• Land acquisition opportunities that might require additional capital allocation

The establishment of these programs positions Meritage among the more shareholder-friendly homebuilders, though the relatively modest size of the buyback program suggests a prudent approach to capital allocation given industry cyclicality.

SCOTTSDALE, Ariz., Feb. 20, 2025 (GLOBE NEWSWIRE) -- Meritage Homes Corporation (NYSE: MTH, “Meritage” or the “Company”), the fifth-largest public homebuilder in the U.S., today announced that its Board of Directors has declared a quarterly cash dividend of $0.43 per share. This quarterly cash dividend is payable on March 31, 2025 to shareholders of record as of the close of trading on March 17, 2025. This compares to a quarterly cash dividend of $0.375 per share in 2024, which reflects the two-for-one stock split that was completed on January 2, 2025.

Additionally, Meritage has renewed its programmatic share repurchase of $15 million during each quarter of 2025 while continuing to be opportunistic under the right market conditions. This repurchase plan is intended to be an evergreen plan unless explicitly changed by the Company.

Forward-Looking Statements

The information included in this press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include the Company’s intention to treat its share repurchase commitment as an evergreen plan.

Such statements are based on the current beliefs and expectations of Company management and current market conditions, which are subject to significant uncertainties and fluctuations. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, except as required by law, to update or revise any forward-looking statements to reflect future events or changes in these expectations. Meritage’s business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company’s stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: increases in interest rates or decreases in mortgage availability, and the cost and use of rate locks and buy-downs; the cost of materials used to develop communities and construct homes; cancellation rates; supply chain and labor constraints; shortages in the availability and cost of subcontract labor; the ability of our potential buyers to sell their existing homes; our ability to acquire and develop lots may be negatively impacted if we are unable to obtain performance and surety bonds; the adverse effect of slow absorption rates; legislation related to tariffs; impairments of our real estate inventory; competition; home warranty and construction defect claims; failures in health and safety performance; fluctuations in quarterly operating results; our level of indebtedness; our exposure to counterparty risk with respect to our capped calls; our ability to obtain financing if our credit ratings are downgraded; our exposure to and impacts from natural disasters or severe weather conditions; the availability and cost of finished lots and undeveloped land; the success of our strategy to offer and market entry-level and first move-up homes; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of earnest money or option deposits; our limited geographic diversification; our exposure to information technology failures and security breaches and the impact thereof; the loss of key personnel; changes in tax laws that adversely impact us or our homebuyers; our inability to prevail on contested tax positions; failure of our employees and representatives to comply with laws and regulations; our compliance with government regulations; liabilities or restrictions resulting from regulations applicable to our financial services operations; negative publicity that affects our reputation; potential disruptions to our business by an epidemic or pandemic, and measures that federal, state and local governments and/or health authorities implement to address it; and other factors identified in documents filed by the Company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2024 under the caption "Risk Factors," which can be found on our website at https://investors.meritagehomes.com.

About Meritage Homes Corporation

Meritage is the fifth-largest public homebuilder in the United States, based on homes closed in 2023. The Company offers energy-efficient and affordable entry-level and first move-up homes. Operations span across Arizona, California, Colorado, Utah, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina and Tennessee.

Meritage has delivered almost 200,000 homes in its 39-year history, and has a reputation for its distinctive style, quality construction, and award-winning customer experience. The Company is an industry leader in energy-efficient homebuilding, an eleven-time recipient of the U.S. Environmental Protection Agency’s (EPA) ENERGY STAR® Partner of the Year for Sustained Excellence Award and Residential New Construction Market Leader Award, as well as a four-time recipient of the EPA's Indoor airPLUS Leader Award.

For more information, visit www.meritagehomes.com.

Contacts:

Emily Tadano, VP Investor Relations and ESG (480) 515-8979 (office) investors@meritagehomes.com

FAQ

What is Meritage Homes' new quarterly dividend amount for 2025?

Meritage Homes' new quarterly dividend is $0.43 per share, payable on March 31, 2025, to shareholders of record as of March 17, 2025.

How much will MTH spend on share repurchases in 2025?

MTH has committed to repurchasing $15 million worth of shares during each quarter of 2025, totaling $60 million for the year if fully executed.

When did Meritage Homes complete its two-for-one stock split?

Meritage Homes completed its two-for-one stock split on January 2, 2025.

What is the percentage increase in MTH's quarterly dividend compared to 2024?

The new quarterly dividend of $0.43 represents a 14.7% increase from the previous dividend of $0.375 per share (adjusted for the stock split).

How will MTH's share repurchase program be implemented?

The share repurchase program will be implemented as an evergreen plan with $15 million quarterly repurchases, with the company remaining opportunistic based on market conditions.