8 Magnificent Dividend Growth Stocks to Buy Now

2. Lowe’s Companies, Inc. (NYSE:LOW)

5-Year Average Annual Dividend Growth Rate: 16.9%

An American retail company, Lowe’s Companies, Inc. (NYSE:LOW) specializes in home improvement. The stock has surged by nearly 24% in 2024 so far, despite encountering certain challenges within the industry this year. The company’s cash position is very strong, which makes it one of the best dividend aristocrat stocks on our list. In the second quarter of 2024, its operating cash flow came in at $7.4 billion, up from $6 billion in the same period last year. The company ended the quarter with over $4.3 billion available in cash and cash equivalents, compared with $3.5 billion in the prior year period. It also remained committed to its shareholder obligation, returning $629 million to investors through dividends.

In addition to its strong cash generation, Lowe’s Companies, Inc. (NYSE:LOW) delivered impressive earnings in Q2, showcasing strong operational results and improved customer service despite challenging macroeconomic conditions, especially for homeowners. The success of its Total Home strategy was reflected in mid-single-digit growth in comparable sales among Pro customers during the quarter. While the majority of its revenue comes from DIY shoppers, the company observed a decline in demand for DIY projects, as consumers have been shifting their spending priorities toward travel and dining out.

That said, Lowe’s Companies, Inc. (NYSE:LOW) faced weak sales during the quarter. The company posted revenue of $23.6 billion, down 5.5% from the same period last year. The revenue also missed analysts estimates by $372.3 million. Madison Investments also highlighted this in its Q3 2024 investor letter. Here is what the firm has to say:

“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) offers a quarterly dividend of $1.15 per share. The company is a strong dividend payer with 59 consecutive years of dividend growth under its belt. Moreover, its 5-year average annual dividend growth rate comes in at nearly 17%. The stock has a dividend yield of 1.70%, as of November 14.