Home Depot vs Lowe's: Yield vs Growth in Dividend Showdown

Home improvement giants Home Depot (NYSE:HD) and Lowe's (NYSE:LOW) have both paid dividends to shareholders recently, but a closer look at their dividend histories reveals significant differences. Home Depot has a higher yield of 2.87% and a longer payout history, having paid a cash dividend for its 156th consecutive quarter. However, this comes at the cost of slower dividend growth, with only a 1.3% increase in the last reset.

Lowe's, on the other hand, has raised its payout by 4%, more than triple Home Depot's percentage raise, and boasts a leaner payout ratio of around 41%. The company also generates significantly more free cash flow, with $9.86 billion produced over the trailing fiscal year against dividend payouts of $2.64 billion.

The two companies have been punished by the housing slowdown, with Home Depot down 19.28% and Lowe's sliding 20.9% over the past year. However, Lowe's is trading at a lower valuation multiple of around 17 times earnings, making it an attractive option for income investors looking for a safer, faster-growing payout.