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How Home Depot’s Dividend Yield Has Trended

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Revenue and EPS of Home Depot

Home Depot (HD) posted a 7% increase in net sales for 2017 compared to 6.4% in 2016 and 6% in 2015. The growth has come from every segment. The company recorded net sales growth of almost 6% in 1H18. The company reported 18% EPS growth in 2017 compared to 16% in 2016 and 26% in 2015. The EPS growth had been affected by the higher operating and interest costs offset by share buybacks. The company has recorded a 15% EPS growth in 1H18 despite higher operating and interest costs, offset by share buybacks. The company has not only maintained a good annual free cash flow balance but has also successfully grown it over the years.

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Home Depot’s dividend trajectory

We can see the upward sloping dividend curve of Home Depot. This is due to the increase in dividend per share offset to an extent by the price gains. Home Depot offers a dividend yield of 2.2%, and its prices have gained 23.3% on a YTD basis. This compares to a dividend yield of 2.3% and YTD price gains of 14.7% from the Dow Jones Industrial Average (DJIA-INDEX) (DIA). The S&P 500 (SPX-INDEX) (SPY) has a dividend yield of 2.4% and YTD price gains of 13.3%. The NASDAQ Composite (COMP-INDEX) (ONEQ) has YTD price gains of 21.4%.

The Schwab US Dividend Equity ETF (SCHD) is a dividend ETF with exposure to Home Depot. It offers a dividend yield of 3% and a PE of 20.3x. The FlexShares Quality Dividend Dynamic Index Fund (QDYN) is a dividend ETF with exposure to Home Depot. It offers a dividend yield of 2.7% and a PE of 21.1x.

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