2. Lowe’s Companies, Inc. (NYSE:LOW)
5-Year Average Dividend Growth: 18.05%
Consecutive Years of Dividend Growth: 59
Lowe’s Companies, Inc. (NYSE:LOW) is a North Carolina-based retail company that specializes in home improvement. The stock has surged by over 14% since the start of 2024 despite facing some industry-related challenges this year. In addition, the company reported strong earnings in the second quarter of 2024. It demonstrated solid operational performance and enhanced customer service, even amid a difficult macroeconomic environment, particularly for homeowners. The momentum of the Total Home strategy is evident, as shown by the mid-single-digit growth in comparable sales with Pro customers this quarter. The company generates most of its revenue from DIY shoppers, but in the latest quarter, it noted a decline in demand for DIY projects as consumers are increasingly shifting their spending towards travel and dining out.
Lowe’s Companies, Inc. (NYSE:LOW) reported revenue of $23.6 billion in Q2 2024, down from 5.5% from the same period last year. The revenue also missed analysts’ estimates by $372.3 million. Comparable sales also declined by 5.1% on a YoY basis. That said, the management is confident in the recovery of its business as soon as the market conditions improve. Madison Investments also presented a positive outlook of the company in its Q2 2024 investor letter. Here is what the firm has to say:
“At home improvement retailer Lowe’s Companies, Inc. (NYSE:LOW), sales continue to be weak. The economic backdrop in housing is particularly interesting at the moment. On one hand, employment levels are healthy and home values remain resilient. On the other hand, housing turnover, which is essentially the number of homes that have been sold relative to the housing stock, is at historically low levels as homeowners are resistant to giving up low mortgage rates on their current home for a higher rate on a new home. Housing turnover is an important business driver for Lowe’s, so the depressed level of activity has weighed on its profits. However, over time we expect it to normalize and Lowe’s performance to improve.”
Although Lowe’s Companies, Inc. (NYSE:LOW) experienced a decline in revenue, its cash generation remained stable throughout the quarter. The company ended the quarter with over $4.3 billion in cash and cash equivalents, up from $3.5 billion in the same period last year. Its operating cash flow also grew to $7.4 billion, from $6 billion in the prior-year period. During the quarter, it also returned $629 million to shareholders through dividends.
Lowe’s Companies, Inc. (NYSE:LOW) currently offers a quarterly dividend of $1.15 per share, having raised it by 5% in May this year. This increase in its dividend stretched the company’s dividend growth streak to 59 years, which makes LOW one of the best dividend stocks for steady growth. Over the past five years, the company has raised its dividends at an annual average rate of over 18%. The stock’s dividend yield on August 23 came in at 1.84%.
At the end of June 2024, 62 hedge funds tracked by Insider Monkey held stakes in Lowe’s Companies, Inc. (NYSE:LOW), up from 60 a quarter earlier. These stakes have a total value of nearly $1.7 billion. With over 1 million shares, Soroban Capital Partners was the company’s largest stakeholder in Q2.
