Home Depot's Generous Payouts Can't Shield Stock from Slowing Growth

Home Depot's (HD) shareholders have received a massive influx of cash over the past five years, totaling $68 billion. This figure accounts for approximately 19.3% of the company's current market value.

The majority of this cash payout came in the form of direct dividend payments, amounting to $42 billion. An additional $26 billion was used to repurchase company stock, reducing the number of outstanding shares and increasing each remaining owner's stake in the business.

However, despite these generous payouts, Home Depot's stock has underperformed the S&P 500 over the last twelve months, with a return of -6.2% compared to the index's +22.0%. This raises questions about the value of prioritizing cash returns over share price appreciation.

The company attributes this slowdown in growth to a decrease in big-ticket spending due to consumer uncertainty and housing affordability pressure. To mitigate this, management is focusing on its Pro segment, which has shown positive comparable sales growth and outperformed the DIY market.