Although many experts fret that high interest rates and low availability have crippled the real estate sector, that's not entirely the case. The luxury real estate sector is still in high demand and offers some solid opportunities for passive income investors. Luxury home builder Toll Brothers (NYSE: TOL) is performing so well that it raised its dividend by 9%. Keep reading to find out if this stock would work in your portfolio.
Toll Brothers doesn't just build homes; they build dream homes. This Fort Washington, Pennsylvania-based company advertises itself as "America's Luxury Home Builder." According to the company bio, Toll Brothers began in 1967 when founders Robert and Bruce Toll renovated an ordinary house and turned it into a luxury home. By the time they were done, it was the kind of property people who are living the American dream line up to buy.
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The brothers' interest in real estate was inspired by their father, who was also a developer. After success with their first luxury property, the brothers decided to make their mark by developing luxury real estate in the Philadelphia area. The Tolls were so successful in this endeavor that they took their company public in 1986, when their stock opened at $12.50 per share.
By 1993, the company had built and sold its 10,000th home and was operating in a diverse group of real estate markets that included North Carolina, California, Texas, New York, and Florida. Although New York and California already had strong real estate markets, the Toll Brothers' expansion into emerging sunbelt markets like North Carolina, Florida, and Texas proved incredibly astute.
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Toll Brothers entered the luxury condominium sector in 2006 with the establishment of Toll Brothers City Living. Their first development, One Ten Third in Manhattan, was a 21-story tower with 77 luxurious residences. Since then, Toll Brothers City Living's portfolio has expanded to include luxury developments in the New York Metro Area, Philadelphia, and Washington, D.C.
Toll Brothers stock has been performing for investors throughout its history as a publicly traded company. The company's stock has split four times since its 1986 IPO and currently trades at $106.15. The current share price is a significant fall off from Toll Brothers' January high of $140, which was likely caused by a Q1 2025 earnings report that missed expectations. However, many analysts believe the stock will eventually recover most of its losses.
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Benzinga's survey of 19 analysts has a consensus price of $137.67, and Evercore ISI believes Toll Brothers could go as high as $184. Keefe, Bruyette & Woods, Barclays, and Oppenheimer provided the most recent price targets, which average $132.67. That means Toll Brothers has some very attractive upside potential for growth investors. It's also worth noting that Toll Brothers is on a five-year streak of increasing shareholder dividends.
The company recently announced it will increase its quarterly dividend by 9% to $0.25 per share, which will be paid out on April 11. Shareholders could see an even larger payout if the company's stock continues to rebound and meets analysts' expectations. In other words, this Fortune 500 company stock might offer an ideal combination of growth and passive income potential. It's worth a look if you are hunting for a well-rounded stock with upside.
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Arrived allows individuals to invest in shares of rental properties for as little as $100, providing the potential for monthly rental income and long-term appreciation without the hassles of being a landlord. With over $1 million in dividends paid out last quarter and a growing selection of properties across various markets, Arrived offers an attractive alternative for investors seeking to build a diversified real estate portfolio.
In October 2024, Arrived sold The Centennial, achieving a total return of 34.7% (11.2% average annual returns) for investors. Arrived aims to continue delivering similar value across our portfolio through careful market selection, attentive property management, and thoughtful timing in sales.
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