A sizeable part of portfolio returns can be produced by dividend stocks due to their contribution to compounding returns in the long run. In the past 10 years The Home Depot Inc (NYSE:HD) has returned an average of 2.00% per year to investors in the form of dividend payouts. Let’s dig deeper into whether Home Depot should have a place in your portfolio. View our latest analysis for Home Depot
5 questions I ask before picking a dividend stock
If you are a dividend investor, you should always assess these five key metrics:
- Is its annual yield among the top 25% of dividend-paying companies?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has it increased its dividend per share amount over the past?
- Is it able to pay the current rate of dividends from its earnings?
- Will it be able to continue to payout at the current rate in the future?
How does Home Depot fare?
The current trailing twelve-month payout ratio for the stock is 49.29%, meaning the dividend is sufficiently covered by earnings. In the near future, analysts are predicting a payout ratio of 48.17%, leading to a dividend yield of around 2.48%. Furthermore, EPS should increase to $8.78. If there is one thing that you want to be reliable in your life, it’s dividend stocks and their constant income stream. HD has increased its DPS from $0.9 to $3.56 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. These are all positive signs of a great, reliable dividend stock. Compared to its peers, Home Depot produces a yield of 1.94%, which is on the low-side for Specialty Retail stocks.
Considering the dividend attributes we analyzed above, Home Depot is definitely worth keeping an eye on for someone looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, I urge potential investors to try and get a good understanding of the underlying business and its fundamentals before deciding on an investment. Below, I’ve compiled three important aspects you should further examine:
- 1. Future Outlook: What are well-informed industry analysts predicting for HD’s future growth? Take a look at our free research report of analyst consensus for HD’s outlook.
- 2. Valuation: What is HD worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether HD is currently mispriced by the market.
- 3. Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.