Home Depot’s Free Cash Flow Makes It A Strong Dividend Growth Consideration


  • Home Depot’s latest quarterly update and outlook weren’t great, but the firm continues to have an enviable competition position.
  • We like the company’s tremendous free cash flow generation and that it has consistently covered its cash dividends paid for years.
  • We value shares modestly higher than where they are trading at as of this writing, and we view the company as a fantastic dividend growth idea. Shares yield ~2.8%.

Orange Home Depot Sign


By Valuentum Analysts

Home Depot’s (NYSE:HD) latest quarterly results left a sour taste in many an investor’s mouth, but we’re not too worried. We believe the company’s positioning with respect to do-it-yourself-ers and professional contractors remains solid, and we expect that

Key Investment Considerations

Key Investment Considerations (Image Source: Valuentum)

Valuation Breakdown

Valuation Breakdown (Image Source: Valuentum)

Range of Potential Outcomes

Range of Potential Outcomes (Image Source: Valuentum)

30-year fixed rate = blue. 15-year fixed rate = green.

30-year fixed rate = blue. 15-year fixed rate = green. (Freddie Mac)

Home Depot's Free Cash Flow Coverage of Its Dividend Has Been Strong

Home Depot’s Free Cash Flow Coverage of Its Dividend Has Been Strong (Data Source: Seeking Alpha)

Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Brian Nelson owns shares in SPY, SCHG, QQQ, DIA, VOT, BITO, RSP, and IWM. Valuentum owns SPY, SCHG, QQQ, VOO, and DIA. Brian Nelson’s household owns shares in HON, DIS, HAS, NKE, DIA, and RSP. Some of the securities written about in this article may be included in Valuentum’s simulated newsletter portfolios. Contact Valuentum for more information about its editorial policies.

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