1. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Average Annual Dividend Growth Rate: 18.05%
With a five-year average annual dividend growth rate of over 18%, Lowe’s Companies, Inc. (NYSE:LOW) tops our list of the best dividend kings for safe dividend growth. On May 31, the company announced a 5% hike in its quarterly dividend to $1.15 per share. This marked the company’s 60th consecutive year of dividend growth. The stock’s dividend yield on June 19 came in at 2.02%.
has an extensive network of stores and a robust online presence, which provides convenience to its customers. Analysts expect that the company will capitalize on increased consumer spending as the housing market rebounds in the coming months. Earlier this year, hedge fund manager Bill Ackman announced that his hedge fund, Pershing Square, had sold its stake in the company after it generated profits of over $1 billion. Ackman informed investors that Lowe’s had been a highly successful investment for Pershing Square, and he decided to liquidate the position after holding it for nearly six years in order to reallocate capital towards new opportunities.
Lowe’s Companies, Inc. (NYSE:LOW) has a forward P/E ratio of 18.90, which appears attractively valued, particularly when compared to its close peer, Home Depot Inc. (NYSE:HD), which is trading at a higher multiple of 23 times forward earnings. Aristotle Capital Management, LLC highlighted the stock’s valuation in its Q1 2024 investor letter:
“During the quarter, we sold our positions in Phillips 66 and Sysco and invested in two new positions: Lowe’s Companies, Inc. (NYSE:LOW) and TotalEnergies.
Based in North Carolina, and with a history dating back to 1921, Lowe’s Companies is the world’s second-largest home improvement retailer (after Home Depot). The company operates more than 1,700 stores in the United States that offer a wide variety of products to enhance a home, from plants for the garden and house décor to hardware and appliances. Often located in suburban areas, Lowe’s stores primarily serve retail “do-it-yourself” customers (~75% of revenue) and sell products that are used for home maintenance and repair (over 60% of revenue). This contrasts with Home Depot, whose stores have a higher presence in metropolitan areas and cater more to professional customers.
We had previously been investors in Home Depot. Over much of the past decade Home Depot had, in our opinion, executed better than Lowe’s—expanding its presence with large professional customers and increasing its store productivity. However, with Lowe’s hiring of former Home Depot executive Marvin Ellison in 2018, we believe Lowe’s has started the process of closing the gap to better compete with its nearest rival…” (Click here to read the full text)
Lowe’s Companies, Inc. (NYSE:LOW)’s shares were held by 60 hedge funds at the end of the first quarter of 2024, down from 68 funds in the previous quarter, as per Insider Monkey’s database. These stakes have a total value of over $2.44 billion.
While we acknowledge the potential of dividend growth stocks, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None.
