12 Most Reliable Dividend Stocks To Buy According to Hedge Funds

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

Number of Hedge Fund Holders: 82

The Home Depot, Inc. (NYSE:HD) ranks fifth on our list of the best dividend stocks. The American home improvement company is currently facing some challenges. As the business is closely tied to the housing market, it has been affected by rising interest rates and inflationary pressures on consumers in recent years. However, Home Depot remains the dominant player in its industry, which management values at $1 trillion. The aging housing stock, combined with a shortage of available homes, is expected to drive long-term demand. In addition, the recent decline in interest rates should provide some support. In the past 12 months, the stock has surged by nearly 10%.

In the third quarter of 2024, The Home Depot, Inc. (NYSE:HD) reported $40.22 billion in revenue, marking a 6.6% increase from the same quarter last year. It achieved operating income of $5.4 billion, with an operating margin of 13.5%. The growth was driven by higher customer demand for seasonal products and outdoor projects, along with a boost in sales from hurricane-related needs.

Carillon Tower Advisers made the following comment about HD in its Q3 2024 investor letter:

“While Home Depot, Inc.’s (NYSE:HD) recent reported earnings were somewhat tepid, the market seems to be pricing in an inversion of the company’s sales, driven by lower interest rates. Home Depot reported its seventh consecutive quarter of same-store sales declines, giving back substantial gains that it enjoyed during the pandemic. High mortgage rates have also put a damper on existing home sales. People typically spend the most on home repairs and improvements in years when they buy or sell houses, often conducting both transactions in the same year.”

The Home Depot, Inc. (NYSE:HD) maintained a strong cash position in FY24. In the first nine months of the year, the company generated over $15 billion in operating cash flow. This strong financial performance allows the company to continue its reputation as a reliable dividend payer. It has been consistently increasing its dividend payouts to shareholders for 14 consecutive years. Its quarterly dividend currently comes in at $2.25 per share for a dividend yield of 2.31%, as of January 12.

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.