Dividend stocks are in the limelight this year as many tech companies have joined the dividend club since the start of 2024. In addition to this, global companies have distributed a record amount in dividends last year. Retail investors are always on the lookout for income stocks. For this reason, we have analyzed the 15 Best Quality Dividend Stocks to Buy According to Reddit in a new article. In this article we are going to take a look at whether The Home Depot, Inc. (NYSE:HD) is the best quality dividend stock to buy according to Reddit.
The Home Depot, Inc. (NYSE:HD)
The Home Depot, Inc. (NYSE:HD) is an American home improvement company that offers a wide range of related tools, products, and services to its consumers. The company also operates an online retail platform that allows customers to purchase its products through the web. Founded in 1978 as a hardware store, the company has since evolved into one of the world’s largest home improvement companies.
Image by Steve Buissinne from Pixabay
The Home Depot, Inc. (NYSE:HD)’s Strong and Stable Dividend Growth
The Home Depot, Inc. (NYSE:HD) currently pays a quarterly dividend of $2.25 per share, having raised it by 7.7% in February this year. Through this increase, the company stretched its dividend growth streak to 14 years. Moreover, it has paid dividends consistently for 149 quarters. The company has shown impressive dividend growth as it has raised its payouts at an annual average rate of 13.87% over the past five years. As of May 18, the stock has a dividend yield of 2.61%, higher than the S&P 500’s dividend yield of 1.3%.
Assessing The Home Depot, Inc. (NYSE:HD)’s Financial Health
The Home Depot, Inc. (NYSE:HD) is a consumer discretionary stock that mainly depends on the market condition and consumer sentiment. As the anticipation of rising interest rates looms, the company reported a 2.3% year-over-year decline in its revenue at $36.4 billion in the first quarter of 2024. Its comparable sales for the quarter also declined by 2.3% from the same period last year. For FY24, the company expects its comparable sales to fall by approximately 1% for the 52-week period. During the quarter, the company generated nearly $5.5 billion in operating cash flow, down from $5.6 billion in the first quarter of 2023. Though its cash position remained relatively strong, it wasn’t sufficient to meet its shareholder obligation smoothly. Its dividend payments for the quarter came in at -$2.2 billion, which shows that the company has paid dividends exceeding its profits.
Reddit’s Take on The Home Depot’s Future Prospects
The Reddit community appreciates the strong dividend history of The Home Depot, Inc. (NYSE:HD) along with its dividend growth. The company’s Employee Stocks Purchase Program has grabbed the attention of retail investors, which is designed for individual investors who might typically avoid small, long-term stock purchases due to high brokerage fees. The stock is also considered reasonably priced with a P/E ratio of 23.10. However, slowing sales and a soft outlook for 2024 have raised some concerns about the stock’s performance in the coming months. The stock has underperformed the S&P 500 in the past year, returning 16.6%, as of the close of May 17. In addition to this, the demand for home improvement projects is expected to drop because of growing housing prices, which is going to affect the company as its main revenue comes from its home improvement segment.
Is The Home Depot, Inc. (NYSE:HD) The Best Quality Dividend Stock to Buy According to Reddit
Reddit users ranked HD at #7 primarily because The Home Depot, Inc. (NYSE:HD) has maintained a strong history of dividend payments and consistent dividend growth. That said, the stock’s cyclical nature has made investors a little hesitant to invest in the company, as consumers tend to cut back on spending in high-interest rate periods. The company’s slow sales are likely to impact its revenue and dividend payments negatively. We aren’t bullish on HD in the near term and believe investors should look for higher ranked alternatives and check out 15 Best Quality Dividend Stocks to Buy or 5 Undervalued Stocks That Just Raised Their Dividends.
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Disclosure: None. This article is originally published at Insider Monkey.
