1. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Annual Dividend Growth Rate: 18.04%
Lowe’s Companies, Inc. (NYSE:LOW) tops our list of the best dividend aristocrat stocks with an 18.04% annual average dividend growth over the past five years. The home improvement retailer operates a network of 1,700 stores across the US, offering a wide range of related products catering to both do-it-yourself (DIY) enthusiasts and professional customers. The company derives the majority of its total revenue from DIY shoppers. However, in the most recent quarter, the company mentioned that demand for DIY projects has decreased as consumers are now directing their spending more toward travel and dining out.
In addition to DIY projects, Lowe’s Companies, Inc. (NYSE:LOW) faces ongoing challenges in the current macroeconomic climate. Higher interest rates and persistent inflationary pressures have dampened consumer enthusiasm for large purchases and costly home renovation projects. Despite these challenges, the company remained financially stable. It has maintained consistent profitability, with its trailing twelve-month operating margin of 12.42%. The company’s revenue for Q1 2024 came in at $21.4 billion, which beat analysts estimates by $256.5 million.
Lowe’s Companies, Inc. (NYSE:LOW) remains committed to a disciplined capital allocation strategy aimed at creating long-term, sustainable shareholder value. In the most recent quarter, the company repurchased around 3 million shares amounting to $743 million, and paid out $633 million to shareholders through dividends. The company offers a quarterly dividend of $1.15 per share and has a dividend yield of 2.17%, as of July 2. It is one of the best dividend aristocrat stocks on our list as the company has been growing its dividends consistently for the past 60 consecutive years.
As per Insider Monkey’s database of Q1 2024, 60 hedge funds owned stakes in Lowe’s Companies, Inc. (NYSE:LOW), down from 68 in the previous quarter. The consolidated value of these stakes is over $2.4 billion. With over 1.4 million shares, Soroban Capital Partners was the company’s leading stakeholder in Q1.
While we acknowledge the potential of LOW as an investment, our conviction lies in the belief that some deeply undervalued dividend stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued dividend stock that is more promising than LOW but that trades at less than 7 times its earnings and yields nearly 10%, check out our report about the dirt cheap dividend stock.
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Disclosure: None. This article is originally published at Insider Monkey.
