11. Lowe’s Companies, Inc. (NYSE:LOW)
Number of Hedge Fund Holders: 60
5-Year Average Payout Ratio: 32.6%
Lowe’s Companies, Inc. (NYSE:LOW) is an American home improvement retailer that offers a wide range of related products and services including hardware, tools, appliances, building materials, paint, plumbing supplies, and garden equipment. Despite the company facing challenges from weaker consumer demand, investors are encouraged to look at the bigger picture within the industry. Analysts note that in 2022, the median age of homes in the US reached 40 years, a notable increase from 31 years in 2005. In addition, the country has been experiencing a significant housing inventory shortage, estimated at between 4 million and 7 million homes. These trends are advantageous for Lowe’s, as they motivate homeowners to invest in improving their existing properties rather than purchasing new ones. In the past 12 months, the stock has surged by nearly 13%.
In the third quarter of 2024, Lowe’s Companies, Inc. (NYSE:LOW) reported revenue of $20.17 billion, which fell by 2% from the same period last year. Despite this, earnings slightly exceeded expectations, even without considering storm-related activities. The positive results were driven by increased Pro sales, robust online performance, and a rise in smaller outdoor DIY projects.
This was also highlighted by Madison Investments in its Q3 2024 investor letter:
“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)’s five-year average payout ratio comes in at just 32.6%, which makes it one of the best safe dividend stocks to buy. This low payout ratio has enabled the company to raise its payouts for 59 years in a row. The company currently offers a quarterly dividend of $1.15 per share and has a dividend yield of 1.85%, as of January 13.
As of the end of Q3 2024, 60 hedge funds tracked by Insider Monkey held stakes in Lowe’s Companies, Inc. (NYSE:LOW), down from 62 in the previous quarter. These stakes have a consolidated value of over $2.2 billion. With over 1.6 million shares, Arrowstreet Capital was the company’s leading stakeholder in Q3.
