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Strategies & Market Trends : Young and Older Folk Portfolio
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To: chowder who wrote (1481)3/3/2023 8:12:00 PM
From: chowder3 Recommendations

Recommended By
Menominee
Mister D
The Beard

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Re: Recent Dividend Increase - Part 3 HD (currently owned)


Home Depot (HD).

Home Depot just increased its dividend by 10%. How can you not love this? A 10% “pay raise” for doing nothing other than being a shareholder? That’s about as good as it gets in life. I’ve said it before, and I’ll say it again. Home Depot oughta be thought of as the dividend depot.

This marks the 14th consecutive year of dividend increases for the home improvement retailer. What’s great about Home Depot is the way in which they consistently increase the dividend by a double-digit rate. The 10-year DGR is 20.7%. And last year’s dividend raise came in at over 15%.



A deceleration? Sure. But the US housing market has been due for an epic correction. Home Depot coming through, despite it all, is evidence of just how reliable this business is.

The stock yields 2.8%, which is 60 basis points higher than its own five-year average. And even after the dividend boost, the payout ratio is an even 50%, which I regard as, essentially, a “perfect” payout ratio that exactly balances retaining earnings against returning capital back to shareholders.

Home Depot isn’t super cheap, but I think it’s a pretty good idea right now. Our last full analysis and valuation video on this business came out back in September. In that video, the estimate for intrinsic value came out to a bit under $350/share. The stock’s price is now at under the $300 mark. This is one of the best retailers I’ve ever looked at. And being able to buy in at a reasonable valuation, with a near-3% yield, fresh off of a 10% dividend raise?

Source: Jason Fieber




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