Home Depot Inc. (NYSE: HD | HD Price Prediction) is rewarding its shareholders once again with a quarterly dividend of $2.25, payable on Thursday, Dec. 12. That is the same as the prior payout. The company faces the prospects of an uncertain economy and the effects of impending tariffs. However, ongoing dividend growth underscores management’s commitment to continuing to deliver consistent value to investors.
24/7 Wall St. Key Points:
- Home Depot Inc. (NYSE: HD) just rewarded its shareholders again with a dividend.
- Its dividend has grown significantly over the past two decades.
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Why Investors Like Dividends
Dividend stocks offer two benefits.
There are two main reasons investors favor dividend stocks. The first is that they offer enticing total return potential. Total return is a comprehensive measure of investment performance that includes interest, capital gains, dividends, and distributions realized over time. In other words, the total return on an investment or a portfolio consists of income and stock appreciation. It is one of the most effective ways to boost the prospects of overall investing success.
Also, dividend stocks can provide investors with a steady, reliable stream of passive income. Passive income is money that is earned with little to no ongoing effort, usually from assets that generate cash flow. This income can come from a variety of sources, including stock dividends. Generating passive income is a desirable financial strategy for those seeking to diversify their income streams or achieve financial independence.
Home Depot’s Dividend
This retailer’s dividend has grown since 2000.
Home Depot’s payout has only increased since 2000, when it was $0.04 per share. While the company has not hiked the dividend every year, that is a compound annual growth rate of over 18% in that time. The current dividend yield is 2.1%, which is about the same as the industry average yield but higher than that of rival Lowe’s Companies Inc. (NYSE: LOW).
Note that Home Depot’s share price has increased by over 524% in that time as well, offering investors plenty of growth along with the income.
Home Depot, the Company
A home improvement superstore operator.
This company operates as a home improvement retailer in the United States and internationally. Its offerings include various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products. It sells its products through websites and stores.
The company also offers installation services for flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces, central air systems, and windows. In addition, it provides tool and equipment rental services.
The company primarily serves homeowners, as well as professional renovators/remodelers, general contractors, maintenance professionals, property managers, and building service contractors. It also serves specialty tradesmen, such as electricians, plumbers, and painters.
Home Depot’s headquarters are in Atlanta. The company was founded in 1978 to operate home-improvement superstores larger than any of its competitors. It went public in September of 1981. Now it competes with or is similar to Lowe’s and smaller hardware stores, as well as Walmart Inc. (NYSE: WMT), Amazon.com Inc. (NASDAQ: AMZN), and others.
Last month’s quarterly report was better than expected, and management raised its full-year sales guidance. Hurricane-related demand helped offset an overall decline in consumer spending. The results also benefitted from the company’s $18.25 billion acquisition of SRS Distribution, a leading distributor of building materials, earlier in the year. Home Depot also says it is prepared to handle the expected effects of tariffs.
Home Depot, the Stock
With shares near an all-time high, Wall Street remains cautiously optimistic.
The stock has grown about 99% in the past five years, outperforming the S&P 500. It is in line with the broader markets over the past year around 31% or so gain. The recent all-time high of $439.37 is higher than the consensus price target of $431.41. Unless analysts update their price targets, they collectively see no upside potential at this time. Yet, on average, the analysts recommend buying shares, with sentiment creeping up in the past few months. Telsey and Truist maintained their Buy-equivalent ratings last month.
The stock is a top pick of billionaire Ken Fisher, and institutional investors hold around 72% of the shares. BlackRock, State Street, and Vanguard have notable stakes. Fewer than 10 million shares, or about 1% of the float, are held short. Note that a couple of executives parted with some shares late last month.
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