Key Takeaways
- Home Depot and Lowe’s both kept paying through a rough 2026, and today Home Depot yields 2.8% and Lowe’s 2.2%.
- Over 20 years, the room each company leaves to keep raising its dividend matters more than today’s yield.
- Home Depot’s dividends used 61% of its free cash flow over the past year, compared with 38% at Lowe’s.
- At each dividend’s current pace, $10,000 in either stock would pay about $7,000 over 20 years.
Home Depot (HD) and Lowe’s (LOW) shares jumped 7% and 8% on Nov. 4, after Democrats won back the House and Senate. Investors bet that could mean help for housing affordability and lower Treasury yields.
Both kept the checks coming through a rough 2026. Home Depot declared its 158th consecutive quarterly dividend on Aug. 20, at $2.33 a share, and Lowe’s paid its $1.25 quarterly dividend on Nov. 4.
So if you could hold only one of them for the next 20 years, which dividend would you want?
| Metric | Home Depot (HD) | Lowe’s (LOW) |
|---|---|---|
| Dividend yield | 2.8% | 2.2% |
| Quarterly dividend | $2.33 | $1.25 |
| Dividend growth, 5 years to January 2026 | 8.4% a year | 15.6% a year |
| Cash dividend payout ratio (TTM) | 61% | 38% |
| Net debt/EBITDA | 2.3x | 2.7x |
| Interest coverage | 8.4x | 6.4x |
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Home Depot’s dividend is taking more of its cash
Home Depot is still growing, if slowly. Sales rose 5.7% to $47.9 billion in the quarter ended Aug. 2, 2026. But comparable sales rose just 1.7% and customer transactions fell 1.0%, as frozen housing turnover held back bigger projects.
The dividend is covered, but with less room than it had a few years ago. Its cash dividend payout ratio climbed from 39.4% in the year ended January 2021 to 72.4% in the year ended January 2026. Over that time, free cash flow swung between $11.5 billion and $18.0 billion, while dividends rose every year:
The ratio eased back to a fair 61% over the 12 months to Aug. 2, 2026. Raises have slowed, though. The per-share dividend rose 2.2% in the year ended January 2026, after growing 8.4% a year over the five years to then, from $6.15 to $9.20. If housing stays stuck, Home Depot doesn’t have much spare cash for bigger raises.
Lowe’s has room to spare
Lowe’s is feeling the same housing chill, and harder right now. Comparable sales rose just 0.2% in the quarter ended July 31, 2026, and transactions fell 2.1%. It also cut its full-year outlook to flat comparable sales and about $12.25 of adjusted earnings per share, down from as much as $12.75. CEO Marvin Ellison is looking further out. As he said on Lowe’s second-quarter call, “we’re going to have to build houses in this country. And when we do, we’re better positioned today, and we’ll be better positioned in the future than we’ve ever been in the history of this company.”
Its dividend has far more cushion. Since the year ended January 2021, free cash flow has held between $6.18 billion and $9.26 billion a year. Over the same stretch, dividends rose from $1.70 billion to $2.64 billion:
Dividends took a well-covered 38% of free cash flow over the 12 months to July 31, 2026. Lowe’s bills itself as a dividend aristocrat. Its per-share dividend grew 15.6% a year over the five years to January 2026, from $2.30 to $4.75, though just 4.4% in the last of those years. The catch is debt: net debt runs 2.7x EBITDA, compared with 2.3x at Home Depot.
So which dividend wins?
If only one of these gets my dividend dollars for the next 20 years, it’s Lowe’s.
At each dividend’s current pace, the income is close. $10,000 in Home Depot would pay about $6,956 over 20 years, and the same amount in Lowe’s about $6,827. At their five-year rates, the gap is much wider: Lowe’s would pay about $24,230 and Home Depot $13,378. So for me, it comes down to which company can get back toward that faster pace. Lowe’s pays out 38% of its free cash flow, against Home Depot’s 61%, so it has far more room to do it.
Plus, I’d be paying less for it. Lowe’s trades at 18x forward earnings, compared with 22x for Home Depot. That’s right in line with its own five-year average and well below its 24x peak in October 2024:
This isn’t to say Home Depot’s dividend is in trouble. It pays the bigger check today, 2.8% against 2.2%, carries less debt and covers its interest more easily. It’s just that over 20 years, I’d rather own the dividend with more room to grow.
Of course, Lowe’s has a soft patch to get through first. It expects third-quarter adjusted earnings per share about 7% below last year’s, and its builder businesses need new home construction to come back.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
