The home improvement retailer remains a resilient income play in a rough market.
Home Depot (HD -2.20%), the largest home improvement retailer in North America, has raised its dividend annually for 17 consecutive years. It maintained that streak– which started at the tail end of the Great Recession — through the COVID-19 recession in 2020, the economic downturn in 2022, and the Fed's aggressive interest rate hikes from 2022 to 2023.
If you had invested $10,000 in Home Depot 17 years ago, your investment would have grown to $121,000 and be paying out $3,300 in annual dividends. If you invest $10,000 today at its forward yield of 2.73%, you would start collecting about $273 in annual dividends.
Image source: Getty Images.
Home Depot operates 2,364 retail stores and 1,340 SRS Distribution locations (acquired in 2024) across the U.S., U.S. territories, Canada, and Mexico. It typically generates more than 90% of its revenue from the U.S. market.
As a home improvement retailer, Home Depot's business thrives when interest rates are low, and the housing market is expanding. From fiscal 2021 to fiscal 2025 (which ended in Feb. 2025), its comps growth cooled off as its gross and operating margins declined.
Metric
FY 2021
FY 2022
FY 2023
FY 2024
FY 2025
Comps Growth
11.4%
3.1%
(3.2%)
(1.8%)
0.3%
Gross Margin
33.6%
33.5%
33.4%
33.4%
33.4%
Operating Margin
15.2%
15.3%
14.2%
13.5%
13.1%*
Data source: Home Depot. *Adjusted for its acquisitions of SRS and other smaller companies.
That pressure can be attributed to the housing market's post-pandemic slowdown, the Fed's 11 consecutive rate hikes in 2022 and 2023, and persistent inflation.
For fiscal 2026, Home Depot expects its comps to rise 0%-2%, its adjusted operating margin to dip to 12.8%-13%, and its adjusted EPS to grow 0%-4%. That outlook suggests its business is gradually stabilizing, even as high mortgage rates chill the housing market.
NYSE · As of 4:00 PM ET 11/03/26
Over the past 12 months, Home Depot spent just 61% of its free cash flow (FCF) and 65% of its earnings per share (EPS) on its dividends. For fiscal 2026, analysts expect its EPS to grow 2% to $15.02, easily covering its forward dividend of $9.32 per share.
At $332 per share, Home Depot's stock still looks reasonably valued at 22 times this year's earnings. The weak housing market and other macro headwinds could limit its near-term gains, but it should remain a reliable blue chip dividend play for long-term investors.
Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool has a disclosure policy.
*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.
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