KB Home (NYSE: KBH) announced late yesterday that the company’s quarterly dividend for its second fiscal quarter ending in May will be reduced from $0.0625 to $0.025. In the announcement, the company’s CEO spelled out the problem even while trying to make it sound like good news:
Having ended the first quarter with a value of homes in backlog 30% greater than the year before, and with increases in all four regions of the business, we see signs that the housing market is recovering. This modification in the dividend will help us to take advantage of growth opportunities while continuing KB Home’s 25-year tradition of paying quarterly dividends to its stockholders.
In other words, KB Home needs the cash more than shareholders do.
Shareholders don’t seem to mind either. Shares of KB Home are up 3.3% at $8.48 in the pre-market, in a 52-week range of $5.02-$13.12.