Updated 3/11/25
Lowe’s is a name most homeowners and contractors know well. As one of the largest home improvement retailers in North America, it has built a reputation for quality products, competitive pricing, and strong customer service. But beyond the aisles of lumber and power tools, Lowe’s has also been a steady performer for investors—especially those looking for dividends.
The company has a long history of rewarding shareholders, consistently increasing its dividend for decades. With the stock pulling back recently, it’s worth taking a closer look at whether Lowe’s is still a strong fit for dividend-focused portfolios.
Key Dividend Metrics
🔹 Dividend Yield: 1.90% (above the 5-year average of 1.68%)
🔹 Annual Dividend Payout: $4.60 per share
🔹 Payout Ratio: 37.2% (leaving plenty of room for future hikes)
🔹 Consecutive Dividend Increases: 61 years
🔹 5-Year Dividend Growth Rate: 20.2% per year
🔹 Next Ex-Dividend Date: January 22, 2025
🔹 Recent Dividend Payment: February 5, 2025
Dividend Overview
Lowe’s has earned its place among the elite dividend-paying companies. With a 61-year streak of consecutive dividend increases, it’s not just a dividend payer—it’s a dividend grower.
The current yield sits at 1.90%, which may not seem high at first glance, but the company’s history of steady growth makes up for it. Over the past five years, Lowe’s has increased its dividend by more than 20% annually. That kind of growth is hard to find, especially from a well-established company.
Another reassuring factor is the payout ratio, which sits at 37.2%. This means Lowe’s pays out just over a third of its earnings as dividends, leaving plenty of room to reinvest in the business and continue increasing payouts. A lower payout ratio generally indicates a safer dividend, even during economic downturns.
For those looking to lock in a steady stream of income, Lowe’s dividend yield is currently above its five-year average. This suggests that the stock might be offering a slightly better opportunity for income investors than it has in recent years.
Dividend Growth and Safety
Dividend growth is where Lowe’s really shines. With a five-year compound annual growth rate of 20.2%, the company has been aggressive about returning cash to shareholders. While it’s unlikely that this pace continues indefinitely, even a more moderate rate of increase would be impressive.
On the safety front, Lowe’s has strong cash flow generation, which is key to sustaining and growing dividends. The company generated $9.62 billion in operating cash flow over the past year, with free cash flow totaling $6.98 billion. With only a fraction of that going toward dividends, there’s no immediate concern about the company’s ability to maintain payouts.
Lowe’s has also been an active buyer of its own shares, consistently reducing its outstanding share count. This helps increase earnings per share, making each remaining share more valuable and further supporting dividend growth.
Chart Analysis
The recent price action of Lowe’s (LOW) suggests that the stock is currently at a crucial juncture. The chart presents a mix of technical signals that dividend and long-term investors may want to consider.
Moving Averages Show a Shift in Trend
The 50-day moving average (orange line) has been declining since reaching its peak in late 2024, while the 200-day moving average (blue line) has remained relatively steady, gradually trending upward. The stock recently crossed below the 50-day moving average and is now hovering just above the 200-day moving average.
Typically, when a stock falls below both of these key moving averages, it suggests a shift from bullish to bearish sentiment. However, the 200-day moving average often acts as a strong support level, and the stock appears to be testing this area. If it holds, there could be a potential bounce in the short term, but if it breaks lower, further downside could be in play.
Volume and Market Participation
Looking at volume, trading activity appears to have been relatively steady, except for a significant spike back in mid-summer. Recently, volume levels have been lower, indicating that there isn’t a strong conviction in either direction. A rise in volume accompanying any move—up or down—could help confirm the stock’s next direction.
If the price begins to rally with higher volume, it would suggest stronger buying interest. On the other hand, continued declines on higher volume would indicate increasing selling pressure.
RSI Indicates Weak Momentum
The Relative Strength Index (RSI) at the bottom of the chart shows that momentum has been weakening for several months. The RSI is hovering in the lower range, meaning the stock has been trending toward oversold conditions.
A low RSI can sometimes indicate a potential reversal if buyers step in, but it can also signal that selling pressure remains strong. If the RSI starts to turn upward, it could suggest that the stock is finding support. If it continues downward, the bearish trend may persist.
Recent Price Action and Candlestick Signals
The latest few candlesticks show that the stock has been struggling to gain traction. The price opened slightly higher but closed at its low for the day, a sign that sellers are still in control. This kind of price action can indicate hesitation among buyers and potential weakness ahead.
The wicks of the recent candles also reveal some indecision. When the stock attempted to push higher, it faced resistance, suggesting that sellers stepped in at those levels. If this pattern continues, it could point to further downside before a stronger base is established.
Analyst Ratings
Lowe’s Companies, Inc. (LOW) has recently seen a mix of analyst upgrades and downgrades, reflecting differing views on its performance and future prospects. The consensus price target among analysts is approximately $279.74, suggesting some potential upside from current levels.
🔼 Recent Upgrades
🔹 Telsey Advisory Group increased its price target to $305, maintaining an outperform rating. This upgrade reflects confidence in Lowe’s ability to execute strategic initiatives and maintain a strong market position.
🔹 Piper Sandler adjusted their price target to $296 from $307, reiterating an overweight rating. The firm believes Lowe’s is well-positioned to benefit from long-term demand for home improvement, despite short-term market fluctuations.
🔽 Recent Downgrades
🔻 RBC Capital lowered its price target to $285 from $292, maintaining a sector perform rating. This suggests they expect Lowe’s to move in line with the broader market rather than outperform it.
🔻 Truist Securities also cut its price target to $290 from $295, citing concerns over potential headwinds in consumer spending and economic uncertainty. Their rating adjustment signals a more cautious near-term outlook.
These differing analyst perspectives reflect both the opportunities and risks facing Lowe’s in the current market environment. While some see strong long-term potential, others remain cautious about the near-term impact of economic conditions on consumer spending.
Earning Report Summary
Lowe’s recently shared its latest earnings report, giving investors a closer look at how the company performed over the past quarter and what to expect moving forward.
Fourth-Quarter Performance
The company wrapped up the fourth quarter with net earnings of $1.1 billion, which translates to earnings per share (EPS) of $1.99. That’s an improvement from the same quarter last year, when EPS came in at $1.77. After adjusting for certain one-time gains, the adjusted EPS landed at $1.93, which was a bit better than what analysts had predicted.
Revenue for the quarter came in at $18.55 billion, which was slightly lower than last year’s $18.6 billion. However, comparable store sales saw a slight increase of 0.2%, marking the first positive growth in this metric since mid-2022. The boost was largely thanks to strong sales from professional customers, solid holiday shopping trends, and post-hurricane rebuilding efforts. Meanwhile, the do-it-yourself (DIY) side of the business remained somewhat sluggish as consumer spending on home projects cooled.
Full-Year Highlights
For the full fiscal year, Lowe’s brought in total sales of $83.7 billion. The professional contractor segment and online sales were standout performers, helping the company gain market share in a competitive industry. Even with some broader economic challenges, Lowe’s managed to keep operating margins steady by focusing on cost control and strategic investments.
What’s Ahead for 2025
Looking forward, Lowe’s is taking a cautious approach with its 2025 outlook. The company expects total sales to land somewhere between $83.5 billion and $84.5 billion, with comparable store sales staying mostly flat or increasing by about 1%. Operating margins are projected to be in the 12.3% to 12.4% range, and EPS is forecasted to come in between $12.15 and $12.40. While these estimates are a bit below what analysts were hoping for, Lowe’s is factoring in ongoing economic uncertainty and shifts in consumer spending habits.
Business Strategy and Market Trends
Lowe’s continues to double down on its efforts to attract professional customers and enhance its online shopping experience. These initiatives are paying off, but the DIY segment remains under pressure as homeowners pull back on discretionary home improvement projects.
One of the biggest challenges right now is the broader housing market. With mortgage rates still elevated and home prices high, fewer people are taking on major renovation projects. However, Lowe’s sees long-term growth opportunities as aging homes require ongoing maintenance and upgrades. Rising personal incomes could also help offset some of the current softness in the market.
Lowe’s has built a reputation for rewarding its shareholders, and that hasn’t changed. The company has now increased its dividend for 41 consecutive years, offering a yield of about 1.9%. On top of that, Lowe’s plans to open five to ten new stores in the next year, signaling confidence in its long-term growth strategy.
Overall, Lowe’s ended the quarter on a solid note, showing resilience in a challenging economic environment. While the outlook for 2025 is a bit more reserved, the company remains focused on its core strengths—serving professional contractors, improving its digital presence, and maintaining steady returns for investors.
Financial Health and Stability
🔹 Revenue (Trailing 12 Months): $83.67 billion
🔹 Net Income: $6.94 billion
🔹 Operating Margin: 9.86%
🔹 Return on Assets: 15.41%
🔹 Total Debt: $39.68 billion
🔹 Cash on Hand: $2.13 billion
🔹 Current Ratio: 1.09
From a financial standpoint, Lowe’s is in solid shape, but there are a few factors to keep in mind. One is its debt level. The company carries $39.68 billion in debt, which is relatively high. It has used this debt strategically—primarily to fund share buybacks—but investors should monitor it, especially if interest rates remain elevated.
That said, Lowe’s generates plenty of cash to handle its financial obligations. The company’s operating margin sits at 9.86%, showing that it can efficiently turn revenue into profit. Meanwhile, its return on assets of 15.41% indicates strong capital management.
Even with its debt load, Lowe’s continues to generate consistent cash flow, which supports both its dividend and ongoing business operations.
Valuation and Stock Performance
Lowe’s stock is currently trading at $233.13 per share, down 3.82% on the day. Over the past year, it has fluctuated between $211.80 and $287.01. At its current level, the stock is trading below both its 50-day and 200-day moving averages, which suggests some short-term weakness.
When looking at valuation metrics, Lowe’s appears to be trading at a reasonable price:
🔹 Trailing Price-to-Earnings (P/E): 19.82
🔹 Forward P/E: 19.72
🔹 PEG Ratio: 2.44
🔹 Price-to-Sales Ratio: 1.65
These numbers indicate that Lowe’s isn’t necessarily cheap, but it’s also not excessively expensive. Compared to its closest competitor, Home Depot, Lowe’s has a slightly lower valuation, making it potentially more attractive for long-term investors.
Risks and Considerations
No investment is without risk, and while Lowe’s has a lot going for it, there are a few factors that dividend investors should keep in mind.
1️⃣ Sensitivity to the Housing Market – Lowe’s business is closely tied to home improvement spending, which can slow down during economic downturns or when interest rates are high. If fewer people are moving or renovating, sales could soften.
2️⃣ Competitive Landscape – Home Depot remains the dominant player in this space, and Lowe’s has sometimes struggled to match its operational efficiency. The company continues to improve, but competition is fierce.
3️⃣ Debt Levels – While Lowe’s generates enough cash to cover its obligations, its $39.68 billion in debt is something to watch. Rising interest rates could make refinancing more expensive over time.
4️⃣ Consumer Spending Trends – Economic uncertainty could lead consumers to delay big-ticket purchases, which would impact Lowe’s revenue. While home maintenance is often a necessity, large-scale renovations are more discretionary.
While these risks are worth considering, Lowe’s has navigated economic cycles before and has continued to increase dividends through various market conditions.
Final Thoughts
Lowe’s has built a strong reputation, not just in home improvement but also in delivering value to its shareholders. With 61 consecutive years of dividend growth, a payout ratio under 40%, and consistent cash flow generation, the company remains one of the more attractive dividend stocks available.
For those focused on dividends, Lowe’s offers:
✔ A strong history of dividend increases with room for further growth
✔ A reasonable payout ratio that ensures dividend safety
✔ Consistent share buybacks that enhance per-share value
✔ A business model that has proven resilient over the years
The stock isn’t at a bargain price, but for long-term investors looking for a reliable dividend payer, Lowe’s remains a company worth keeping on the radar.
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