We took a close look at Lowe’s to see if it’s a smart choice for a stock dividend investment. Let’s break down what we found.
Lowe’s is the world’s second-biggest home improvement retailer, starting back in 1946 in North Carolina. Nowadays, it has about 310,000 employees and serves 17 million customers each week through its nearly 2,400 stores spread across the U.S., Canada, and Mexico. They offer everything from hand tools to sinks and tiles, along with installation services.
Lowe’s stands out as a Dividend King, meaning it has a solid track record of rewarding its investors for many years. While Home Depot still leads the pack, Lowe’s is making strategic moves under its new CEO, Marvin Ellison, to close the gap. Unlike many other retailers struggling against Amazon, Lowe’s has held its ground thanks to great service and competitive pricing.
In terms of finances, Lowe’s had a strong 2018. Their sales hit $68.619 billion, up 5.5% from the year before, with earnings at $3.436 billion. They ranked 40th on the FORTUNE 500 list for U.S. corporations based on revenue. Over the past five years, their financials have consistently improved, and the stock price has nearly doubled in that time.
Lowe’s has paid dividends every quarter since it went public in 1961, making it a dream for dividend investors. With 57 years of continuous dividend growth, it’s part of the elite group known as Dividend Kings. While its current dividend yield is 2%—below the average of 2.7% for dividend aristocrats—Lowe’s only needs to use about 38% of its earnings to keep growing dividends, leaving more cash for expansion.
Despite improvements, Lowe’s still trails behind Home Depot in financial performance. For instance, Home Depot’s profit margins and sales growth have been higher. However, Lowe’s valuation measures are similar to Home Depot’s, suggesting it’s on solid ground to grow its market share.
Lowe’s balance sheet is showing positive signs too. With $1.67 billion in cash, they’re in a good position to pay down debt. They’ve been cutting costs and shutting down underperforming stores to focus on core areas, withdrawing from non-essential operations like retail in Mexico.
For investors, Lowe’s offers consistent dividend growth along with promising potential under its new management team. The CEO has been proactive in cost-cutting, adding to shareholder value. Given its long history and recent performance, a long-term investment approach could yield good results, especially if dividends are reinvested to benefit from compound interest. With nearly 60 years as a public company, Lowe’s has proven its resilience over time.