If you’re a dividend investor, few names carry as much weight as Home Depot. The Atlanta-based retailer offers shareholders a forward yield of almost 2.5%, outpacing the S&P 500‘s yield of 1.1%. 

While Lowe’s is a Dividend King, its closest peer, Home Depot (HD), has raised payouts for more than 15 consecutive years.

HD stock is also a component of the Dow Jones Industrial Average. That’s a solid combination of prestige and consistent payouts that continues to attract income-focused investors.

And now, even with the U.S. housing market stuck in a rut, Home Depot (HD) approved another dividend increase.

For investors who rely on steady income, that’s the kind of news that keeps HD stock in their portfolios year after year, even when the broader business faces real headwinds.

Home Depot hikes its dividend amid near-term headwinds.

Derek White/Getty Images

Home Depot raises its dividend (again)

Last week, Home Depot unveiled a 1.3% increase to its quarterly dividend, bumping it to $2.33 per share. That works out to $9.32 per share on an annual basis.

The raise came alongside the company’s fourth-quarter and full-year fiscal 2025 earnings report, which showed some clear pressure on the business.

  • Full-year sales came in at $164.7 billion, up 3.2% from fiscal 2024.
  • But comparable sales, which strip out the effect of new store openings, only grew 0.3%. In the U.S. specifically, comps were up just 0.5% for the year.
  • Adjusted diluted earnings per share (EPS) came in at $14.69 for the full year. That’s a decline from $15.24 in fiscal 2024.

So why raise the dividend at all? Because Home Depot isn’t a company that flinches easily.

Chief Financial Officer Richard McPhail made clear during the earnings call that capital allocation priorities haven’t shifted. 

Related: Home Depot resets on ‘frozen’ housing market guidance

The company reinvests in the business first, pays the dividend second, and then, once debt comes down, returns excess cash through share buybacks.

McPhail said the company expects to return to share repurchases sometime in the first half of 2027.

Home Depot’s dividend metrics 

According to data from Fiscal.ai, HD stock has raised its annual dividend from $0.40 per share to $9.32 per share. 

Its annual dividend expense in fiscal 2027 will total roughly $9.3 billion, while the home-improvement giant is forecast to report free cash flow of $15.6 billion, indicating a payout ratio of 60%. 

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Analysts forecastfree cash flow to grow to $21.3 billion in fiscal 2031. Comparatively, its annual dividend per share is projected to increase to $11.53 in fiscal 2031. 

Here’s a snapshot of the most important dividend ratios for HD stock:

  • Annual dividend per share: $9.32
  • Quarterly dividend per share: $2.33
  • Dividend yield: Approximately 2.44% (based on recent share price)
  • Dividend growth rate (10-year CAGR): 13%
  • Dividend payout ratio: Approximately 60% 
  • Consecutive years of dividend increases: 15+ years 

The housing market is key for HD stock

Home Depot’s business is deeply tied to housing. When people buy and sell homes, they spend money on renovations.

Right now, neither of those things is happening at full speed.

  • Mortgage rates hovering near 6% have frozen housing turnover. Homeowners who locked in rates of 3% or 4% a few years ago simply don’t want to move.
  • McPhail noted that around 70% of outstanding mortgages carry rates below 5%. That’s a powerful disincentive to buy or sell.

As a result, housing turnover has been near historical lows since 2023. That directly hurts demand for the kind of big-ticket projects, including kitchen remodels, flooring overhauls, and major renovations, that drive Home Depot’s highest-margin sales.

CEO Ted Decker said during the earnings call that larger discretionary projects remain “under pressure.” Big-ticket comp transactions over $1,000 were up just 1.3% in the fourth quarter.

  • Looking ahead to fiscal 2026, the company expects comp sales to grow between flat and 2%.
  • Total sales growth, helped by its SRS Distribution acquisition and new store openings, is projected at 2.5% to 4.5%. Adjusted EPS is expected to grow approximately flat to 4%.

That’s not a blockbuster outlook. But it’s a stable one.

What is the Home Depot stock price target?

Lowe’s, Home Depot’s closest rival, has its own strong dividend track record. But HD’s scale: 2,359 stores, a $164.7 billion revenue base, and an expanding professional contractor business, gives it a durability that’s hard to match.

Out of the 21 analysts covering HD stock, 17 recommend “buy”, four recommend “hold,” and none recommend “sell”.

The average Home Depot stock price target is $421.60, indicating an upside potential of 10.75% from current levels. 

Long-term, management remains bullish. Home equity values have surged roughly 80% since 2019.

Homes are aging. And pent-up demand for large projects continues to build. McPhail estimated that figure could be greater than $20 billion.

When the housing market eventually thaws, Home Depot will be ready. In the meantime, it’s still writing checks to shareholders.

Related: Lowe’s quietly edges past Home Depot in battle for shoppers