10 Most Promising Dividend Stocks According to Hedge Funds

7. The Home Depot, Inc. (NYSE:HD)

Number of Hedge Fund Holders: 82

The Home Depot, Inc. (NYSE:HD) is an American home improvement company that is engaged in the sale of building materials and home improvement products. The company boasts over 2,300 stores in the US, Canada, and Mexico.

The US housing market has faced challenges in recent years due to rising interest rates, higher mortgage costs, and inflationary pressures affecting consumers. However, a recent decline in interest rates is expected to offer some relief. On January 15, The Home Depot, Inc. (NYSE:HD) saw its stock climb 3.38% following a lower-than-expected core Consumer Price Index (CPI) for December. As inflation continues to ease, the broader economy stands to benefit, with Home Depot likely to see positive effects as well.

The home improvement industry is vast and highly fragmented, with an estimated annual value of $1 trillion. While The Home Depot, Inc. (NYSE:HD) is the largest company in the sector, it holds only a 15% market share. This leaves significant room for growth, as the company has the potential to capture a larger share from smaller competitors that struggle to compete with its strong brand presence, extensive inventory, and seamless omnichannel capabilities.

The Home Depot, Inc. (NYSE:HD) maintained a solid financial position in fiscal year 2024, generating more than $15 billion in operating cash flow during the first nine months. This strong cash flow reinforces the company’s ability to uphold its reputation as a dependable dividend payer. The company has consistently raised its dividend payouts for 14 consecutive years, which makes it one of the most promising stocks that pay dividends. It currently offers a quarterly dividend of $2.25 per share and has a dividend yield of 2.18%, as of January 30.

Of the 900 hedge funds tracked by Insider Monkey at the end of Q3 2024, 82 funds held stakes in The Home Depot, Inc. (NYSE:HD), down from 86 in the previous quarter. These stakes have a total value of roughly $7.6 billion.