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Do Home Depot and Lowe’s Dividends Look Attractive?

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Dec. 28 2018, Updated 10:30 a.m. ET

Importance of dividends

Dividends help smooth out return volatility for shareholders especially for home improvement retailers, which are cyclical. Home Depot (HD) and Lowe’s (LOW) have a strong history of returning cash to shareholders.

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Home Depot’s dividends

On November 15, Home Depot announced quarterly dividends of $1.03 per share, which were paid on December 13 to shareholders on record as of November 29. The dividends were paid at an annualized rate of $4.12. As of December 21, the company’s dividend yield stood at 2.57% with its stock price trading at $160.48.

For 2018, Home Depot has paid dividends of $4.12, which represents 15.7% growth from $3.56 in 2017.

Lowe’s dividends

On November 9, Lowe’s announced quarterly dividends of $0.48 per share, which will be paid on February 6, 2019, to shareholders on record as of January 23, 2019. As of December 21, the company’s dividend yield stood at 2.19% with its stock price trading at $87.64.

For 2018, Lowe’s has paid dividends of $1.78, which represents 17.1% growth from $1.52 in 2017.

Share repurchases

Apart from paying dividends, Home Depot and Lowe’s have rewarded shareholders with share repurchases. In the first nine months of 2018, Home Depot repurchased 28.5 million shares for $5.5 billion. The company plans to repurchase shares worth $2.5 billion in the fourth quarter.

Lowe’s repurchased 17.5 million shares in the first nine months of 2018 for ~$1.6 billion. By the end of the third quarter, the company had $4.5 billion available in its share repurchase program. On December 12, the company announced a new $10 billion share repurchase program in addition to its existing share repurchase program.

Next, we’ll discuss analysts’ recommendations for Home Depot and Lowe’s.

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