Home Depot

The Home Depot is, by far, the largest home improvement company in the US and twice the size of its nearest competitor - Lowe's Companies. It's also one of the most popular stores for the average American homeowner to visit. And while it's not on the list of Dividend Aristocrats, it should be. The reason is because the guys that manage this company are financially conservative. This is a great company and  should be part of every investor's portfolio.
 

The Company

The Home Depot, Inc. (HD) operates as a home improvement retailer. The Home Depot stores sell various building materials, home improvement products, and lawn and garden products as well as provide installation, home maintenance, and professional service programs to do-it-yourself, do-it-for-me, and professional customers. The company offers installation programs that include flooring, cabinets, countertops, water heaters, and sheds, as well as act as a contractor to provide installation services to its do-it-for-me customers through third-party installers. It primarily serves professional remodelers, general contractors, repairmen, small business owners, and tradesmen. The company also sells its products through online. As of March 13, 2014, it operated 2,263 retail stores in the United States, the District of Columbia, Puerto Rico, U.S. Virgin Islands, Guam, 10 Canadian provinces, and Mexico. The Home Depot, Inc. was founded in 1978 and is based in Atlanta, Georgia. (Daily Chart) (Weekly Chart)

23 October
Price $115.91
1yr Target $122.95
Analysts 22
1yr Cap Gain 6.07%
Dividend $2.36
Yield 2.03%
1yr EST Tot Return 8.10%

Market Cap $152.75 Bil
Beta 1.04
EPS (ttm) $4.72
Payout Ratio 50.00%
EPS next yr $5.99
P/E 24.56
PEG 1.69
Forward P/E 19.35
Debt/Equity 1.84
ROA 15.10%
ROE 59.00%
ROI 25.80%
Sales $83.18 Bil
Income $6.35 Bil
Profit Margin 7.63%

Revenues, Earnings and Dividends

As almost every investor knows, companies like The Home Depot suffered during the economic recession that occurred during 2008-2010 and it can be seen quite easily in their revenue numbers below. To a minor extent earnings suffered as well. But looking at the numbers below its evident just how smart, agile and adaptive the employees and managers really are. The company now has that period well behind it. Revenues and earnings are back on track and are once again at or above historical benchmarks. 

Throughout this entire period the management of The Home Depot kept their shareholders in mind. Sure, dividends stagnated in 2008-2010 but they were never decreased, despite the reduction in earnings during that time. And now that earnings are once again increasing, dividends are back to increasing above 20% per year. This truly is a company that cares about its shareholders. 

Year
2017 Est
2016 Est
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004

Revenues
$90.45 Bil
$86.91 Bil
$83.20 Bil
$78.81 Bil
$74.75 Bil
$70.39 Bil
$67.99 Bil
$66.17 Bil
$71.28 Bil
$77.34 Bil
$90.83 Bil
$81.51 Bil
$73.09 Bil
$64.81 Bil

Earnings
$5.99
$5.25
$4.66
$3.76
$3.00
$2.47
$2.01
$1.57
$1.34
$2.37
$2.79
$2.72
$2.26
$1.88

Dividends
$2.80
$2.46
$2.00
$1.64
$1.26
$1.08
$0.95
$0.91
$0.90
$0.90
$0.75
$0.45
$0.35
$0.27

Payout Ratio
46.74%
46.85%
42.91%
43.61%
42.00%
43.72%
47.26%
57.96%
67.16%
37.97%
26.88%
16.54%
15.48%
14.36%

Revenue Growth Rate
1 year = 5.57%
2 year = 5.50%
3 year = 5.67%
4 year = 5.17%
5 year = 4.68%
10 year = 1.30%

Earnings Growth Rate
1 year = 23.93%
2 year = 24.63%
3 year = 23.30%
4 year = 23.39%
5 year = 24.30%
10 year = 7.50%

Dividend Growth Rate
1 year = 21.95%
2 year = 25.98%
3 year = 22.54%
4 year = 20.45%
5 year = 17.05%
10 year = 19.04%

The Competition

The Home Depot Inc. is part of the Home Improvement Stores Industry which is part of the Services Sector of the economy. Below are a few of the major corporations included in this industry. The Home Depot and Lowe's Companies are the only two companies that pay a dividend. They are listed in the order of their market capitalization.

1. The Home Depot Inc.  (HD)
   
2. Lowe's Companies  (LOW)
   
3. Lumber Liquidators Holdings, Inc  (LL)
   
4. Builder's FirstSource Inc  (BLDR)
   
5. Tile Shop Holdings, Inc  (TTS)

Conclusion

This is one of those great companies that everyone knows about but because of their stagnated dividends in 2008-2009, this company isn't on any Dividend Growth wish lists. But it should be. This company is rock solid and should be a core investment for most investors. In fact, both The Home Depot and Lowe's Companies have been great investments for millions of smart investors. I own stock in both of these companies and I plan to continue to accumulate shares in these companies for a long, long time.   

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