1. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Annual Dividend Growth Rate: 16.9%
Lowe’s Companies, Inc. (NYSE:LOW) is an American retail company, specializing in home improvement. The stock has surged by over 11.5% in the past 12 months, grabbing investors’ attention. According to analysts, the continued demand for construction, repair, and remodeling supplies offers a strong basis for ongoing growth, as long as the company continues to prioritize customer needs. However, Lowe’s is currently experiencing the effects of a sluggish economy. In the most recent quarter, the company reported revenue of $20.17 billion, a decrease of almost 2% compared to the same period last year. Despite this, earnings slightly exceeded expectations, even excluding storm-related activity. Growth in Pro sales, strong online performance, and smaller outdoor DIY projects helped support the results.
Madison Investments also highlighted this in its Q3 2024 investor letter. Here is what the firm has to say:
“In the third quarter, the top five individual contributors to performance relative to the benchmark were Parker-Hannifin Corporation, Fiserv, Lowe’s Companies, Inc. (NYSE:LOW), Brookfield Corporation, and Progressive Corporation. Despite operating in very different sectors, Lowe’s Companies and Brookfield Corporation are both expected to benefit from the economic activity spurred on by declining interest rates. The Federal Reserve’s decision to lower interest rates sparked investor enthusiasm for both companies during the quarter, even as their sales and profits continue to moderate. For Lowe’s, sales remained weak in the latest quarter as most measures of the housing market remain sluggish. However, if interest rates come down and mortgages become more affordable, activity should return to the housing market which will boost Lowe’s business.”
Lowe’s Companies, Inc. (NYSE:LOW) is favored by income investors as the company holds a 59-year track record of consistent dividend growth. In addition, it has raised its payouts at an annual average rate of nearly 17% in the past five years, which makes LOW one of the best dividend aristocrat stocks on our list. Its quarterly dividend comes in at $1.15 per share for a dividend yield of 1.85%, as of December 29.
At the end of the third quarter of 2024, 60 hedge funds in Insider Monkey’s database owned stakes in Lowe’s Companies, Inc. (NYSE:LOW), falling from 62 in the previous quarter. The total value of these stakes is over $2.2 billion.
Overall, Lowe’s Companies, Inc. (NYSE:LOW) ranks first on our list of the best dividend aristocrat stocks. While we acknowledge the potential for LOW to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than LOW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
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