Key Takeaways
📈 Home Depot offers a forward dividend yield of 2.54% with consistent growth, supported by a payout ratio just over 60% and a strong history of annual increases.
💵 The company generated $19.8 billion in operating cash flow and $16.3 billion in free cash flow over the trailing twelve months, leaving ample room for dividends and reinvestment.
📊 Analysts maintain a generally favorable outlook with an average price target of $433, reflecting confidence in the company’s stability and operational performance.
Last Updated 5/11/25
Home Depot (HD) is a retail powerhouse in the home improvement space, with over 2,300 stores across North America and a reputation built on consistent execution and reliable financial performance. The company reported \$39.7 billion in revenue in its most recent quarter, alongside \$19.8 billion in operating cash flow over the trailing twelve months. It continues to deliver steady earnings and shareholder returns, backed by disciplined management and a strong cash-generating model.
For dividend-focused investors, Home Depot offers a forward yield of 2.54% and an annual dividend of \$9.20 per share. Its payout ratio remains healthy at just over 60%, supported by \$16.3 billion in free cash flow. Even in a more cautious housing market, the company is expanding selectively, enhancing its digital capabilities, and maintaining a shareholder-friendly capital return program.
Recent Events
Home Depot has been navigating a tough economic environment with a steadiness that’s almost become its trademark. Despite all the noise around inflation, housing slowdowns, and shifting consumer habits, the company just keeps doing what it does best—moving product, generating cash, and delivering returns.
In its latest quarter, Home Depot posted a 14.1% jump in revenue from the previous year. That’s a strong figure, especially when many retailers are still adjusting to a slower pace of consumer spending. Even more telling, earnings per share climbed to $14.91 over the trailing twelve months, marking a 7% increase. These aren’t fluke numbers. They reflect a business that’s staying lean, managing costs, and keeping customers coming back.
While the broader market wrestles with uncertainty, HD has stayed focused on execution. That includes everything from supply chain efficiency to technology investments and tightening store operations. There’s a lot of behind-the-scenes work going on, and it’s paying off in real numbers.
Margins are holding up, with operating margin at 11.32% and net income reaching $14.81 billion. Those kinds of figures don’t come easy in this environment—they’re the result of discipline and scale. And they feed directly into Home Depot’s ability to keep rewarding shareholders.
Key Dividend Metrics
📈 Forward Yield: 2.54%
💵 Annual Dividend Rate: $9.20
📆 Last Dividend Date: March 27, 2025
⏳ Payout Ratio: 60.36%
📊 5-Year Average Yield: 2.29%
🚀 Dividend Growth Rate (5Y CAGR): Steady and consistent
🔒 Safety Profile: High—strong cash generation
📉 Debt-to-Equity: 950.08% (strategic, not reckless)
Dividend Overview
Home Depot’s dividend yield might not jump off the page at 2.54%, but there’s more to the story. This is about consistency and growth, not a flashy payout. With a current annual dividend of $9.20 per share, HD is sending a clear message—it knows how to take care of its shareholders.
The payout ratio sits a touch over 60%. That’s not low, but it’s well within a comfortable range for a company with Home Depot’s cash flow. The business generated nearly $20 billion in operating cash flow over the past year. That gives it ample breathing room to pay the dividend, reinvest in operations, and continue reducing share count through buybacks.
For income investors, this is exactly the kind of setup that works. You’re not chasing yield—you’re getting a stable, rising income stream that’s built on top of a business with decades of proven results.
This kind of stability matters. Investors relying on dividend income don’t want surprises. With HD, you get a track record of payouts that show up on time, quarter after quarter, with steady bumps along the way.
Dividend Growth and Safety
Home Depot has been quietly growing its dividend for years, and it’s done so with a level of discipline that stands out in the market. This isn’t just about handing out cash—it’s about doing it responsibly and predictably.
Over the last five years, dividend growth has stayed nicely ahead of inflation, providing real income gains for long-term shareholders. That kind of compounding makes a big difference over time, especially when reinvested.
What makes this growth sustainable is HD’s free cash flow position. Over $11 billion in levered free cash flow gives the company all the runway it needs to keep raising dividends without straining its balance sheet.
Now, there’s no ignoring the high debt-to-equity ratio. On paper, 950% looks steep. But the reality is more nuanced. This is a company that’s chosen to run lean on equity by aggressively buying back shares. It uses debt strategically, not recklessly, and the consistent cash flow makes that possible. This capital structure approach has helped boost shareholder returns without jeopardizing financial health.
The timing of the dividend also underscores Home Depot’s reliability. The most recent payment landed on March 27, 2025, with an ex-dividend date of March 13. It’s a rhythm investors can count on. No drama, no disruption.
It’s this mix of predictability, growth, and cash strength that makes HD such a compelling name for income-focused portfolios. You’re not just collecting a check—you’re owning a piece of a business that knows how to keep those checks coming.
Let me know when you’re ready for the next section.
Cash Flow Statement
Home Depot’s cash flow profile over the trailing twelve months shows a business generating strong internal liquidity, even as it navigates a capital-intensive environment. Operating cash flow came in at $19.81 billion, reflecting the company’s steady earnings engine and solid working capital management. Free cash flow stood at $16.33 billion, which confirms that Home Depot still has ample room to return capital to shareholders after covering necessary investments.
On the investment side, cash outflows reached $21.03 billion, a noticeable jump from prior years, driven by increased outlays likely tied to strategic initiatives or larger capital investments. Despite this, financing activity remained muted compared to historical levels, with only a slight net cash outflow of $694 million. The issuance of $10 billion in new debt was partially offset by repayments and modest share repurchases. At the end of the period, Home Depot’s cash position declined to $1.66 billion, reflecting the company’s willingness to deploy capital aggressively while staying comfortably within the bounds of its strong cash-generating capacity.
Analyst Ratings
🟡 Home Depot has recently seen a shift in analyst sentiment, with some re-evaluating their positions in light of changing market dynamics. Gordon Haskett moved their rating from “Buy” to “Hold,” pointing to valuation concerns and possible pressure from a softer housing market. Alongside the downgrade, they trimmed their price target from $450 to $350, signaling a more conservative outlook for the near term.
🟢 On the more optimistic side, several firms continue to support the stock. Wells Fargo held steady with their “Overweight” rating but nudged their price target down from $445 to $420. The adjustment reflects cautious optimism—acknowledging Home Depot’s strong execution while recognizing that broader economic forces may cap upside in the near term. Truist Financial echoed a similar view, maintaining their “Buy” rating and lifting their target slightly from $391 to $393. Their continued confidence seems rooted in Home Depot’s brand strength and ability to manage costs in a volatile retail environment.
📈 The current analyst consensus lands at an average price target of $430.32, and the overall tone remains constructive. Most analysts still view Home Depot as a quality name that can weather economic fluctuations while rewarding long-term investors.
Earning Report Summary
Solid Quarter with a Lift in Sales
Home Depot closed out its fourth quarter of fiscal 2024 on a strong note, with revenue reaching $39.7 billion. That marked a solid 14.1% increase from the same period a year ago. After a stretch of softer quarters, the company managed to turn things around with comparable sales ticking up 0.8% globally and 1.3% in the U.S. It was the first quarter of comp growth after a two-year lull, which definitely stood out.
Earnings per share came in at $3.13, which landed ahead of what most were expecting. The numbers show a company that still knows how to execute, even in a mixed economic environment. Management has clearly been working to stay ahead of inflationary pressures and changing consumer patterns, and it seems to be paying off.
Leadership Weighs In
CEO Ted Decker shared some perspective on where things stand. He pointed out that while smaller home improvement projects are still seeing demand, the larger renovation jobs are feeling the pinch. Higher interest rates have made financing those bigger updates less attractive, which has slowed some activity.
CFO Richard McPhail added that although demand for big-ticket items is still lagging, there’s hope that things will even out as the rate environment stabilizes. The company is keeping an eye on customer behavior and adjusting accordingly, which has always been one of its strengths.
Guidance with Caution
For the full year ahead, Home Depot is taking a more measured view. The company is calling for about 2.8% growth in total sales, with comps expected to rise roughly 1%. Earnings per share are forecasted to dip slightly, down about 2% year over year. It’s not a bearish outlook, but rather a realistic one in light of the current economic conditions.
Even so, Home Depot isn’t sitting still. It plans to open 13 new stores and continue investing in areas that improve the shopping experience, whether that’s through technology, logistics, or customer service. Management made it clear that while they’re staying cautious, they’re also keeping their eyes on long-term opportunities.
All in all, the quarter showed that Home Depot remains a steady operator, even when the market gets choppy. With a focus on fundamentals and careful planning, it’s positioning itself to stay resilient and adapt as conditions change.
Management Team
Home Depot’s leadership is headed by CEO and Chairman Ted Decker, who stepped into the role in 2022 after a long tenure with the company. Decker has emphasized sharpening operational efficiency and expanding digital capabilities, key areas that are shaping the future of retail. His approach reflects a balance between maintaining Home Depot’s core strengths and pushing for innovation where it counts.
The executive team includes Richard McPhail as Chief Financial Officer, known for his disciplined handling of the company’s finances and strategic capital decisions. Jordan Broggi, as Executive Vice President of Customer Experience and President of Online, is steering the company’s growing digital platform. Billy Bastek leads merchandising and ensures the right product mix is on shelves and online. Ann-Marie Campbell brings deep experience from her long career with the company and remains a driving force behind store operations and employee development. John Deaton leads the supply chain and product development efforts, which are increasingly critical in today’s logistics-driven environment. Together, this team blends experience with forward thinking, keeping Home Depot grounded but adaptable.
Valuation and Stock Performance
As of May 2025, Home Depot’s stock trades around $362 per share. The company carries a market cap close to $360 billion, with an enterprise value of roughly $421 billion. Its current trailing price-to-earnings ratio of about 24 puts it in line with its historical valuation, showing that the market is valuing the stock fairly given its consistent performance and dividend payout.
Analysts remain moderately bullish on the stock, with an average price target around $433. This suggests some room for upside, even if not a dramatic one. Some firms have adjusted their expectations downward, citing macroeconomic pressures, while others highlight the company’s strong cash flow and operational discipline as reasons to stay constructive. Over the past twelve months, the stock has seen modest movement, holding relatively steady while broader indices have pushed higher.
One area where Home Depot shines is its dividend. Yielding 2.54% with a forward annual payout of $9.20 per share, it remains a reliable income play for investors. The company has also consistently repurchased shares, adding a layer of value creation for long-term holders.
Risks and Considerations
Several risks are worth keeping in mind. A cooling housing market and elevated interest rates may weigh on consumer demand, especially for major renovation projects. Since much of Home Depot’s revenue is tied to home-related spending, its performance is naturally linked to these broader economic trends.
Supply chain issues, though less severe than during the height of the pandemic, remain a factor. Delays or cost increases can ripple through inventory levels and pricing strategies. At the same time, the competitive landscape is always shifting. While Home Depot has scale and brand strength, it faces continuous pressure from online competitors and big-box peers.
Cybersecurity is another important area, particularly with the company’s ongoing digital transformation. Home Depot has dealt with data breaches in the past, so safeguarding customer information is more critical than ever. Regulatory issues, including changing tax and environmental laws, could also influence costs and operations in the years ahead.
Final Thoughts
Home Depot remains a reliable and well-managed company, even as it faces an evolving retail environment and economic pressures. Its leadership team brings a long view and a practical mindset to strategy, while continuing to invest in areas that enhance long-term competitiveness.
The business still generates strong cash flow, supports a generous and growing dividend, and has demonstrated the ability to weather different cycles. While the short-term outlook might carry more uncertainty due to external factors, the company’s fundamentals and strategic focus make it a solid name for investors who value consistency and income.
Looking ahead, how the company navigates interest rate shifts, consumer behavior changes, and technology adoption will shape its next chapter. But based on its track record and disciplined management style, Home Depot looks positioned to keep delivering through the ups and downs.