Home Depot’s Dividend Is Doing Something Most Retail Stocks Cannot

Chris Lange

Wed, October 14, 2026 at 12:45 PM EDT 5 min read

Quick Read

Home Depot has paid $2.33 per quarter for 156 consecutive quarters, costing ~$9.3B annually against $12.65B in free cash flow.
Lowe’s 39% payout ratio beats HD’s 63%, but its yield is only ~2.5% and comparable sales are guided flat; Target’s free cash flow fell 26%.
Another free cash flow drop like fiscal 2025’s 30% decline would push coverage below the dividend bill, forcing debt or slower raises.
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Shares of Home Depot (NYSE:HD) are down 13.43% year to date and 20.96% over the past year. Through that decline, the company has kept paying $2.33 per share every quarter. For retirees who own the stock, the price reflects a frozen housing market. The dividend reflects a cash engine that still covers the bill comfortably.

A daytime photograph of a Home Depot store's front facade. The prominent orange 'THE HOME DEPOT' sign is mounted on the beige upper section of the building. The lower part of the building and several structural pillars are faced with natural brown and gray stone. Large, reflective windows span across the front, with the main glass entrance doors visible, featuring an 'Enter' sign. Two American flags are displayed on flagpoles attached to the stone pillars, one on the left and one on the right side of the entrance. Tree branches are visible in the upper left corner of the frame, with a cloudy sky overhead. — Lokibaho / Getty Images

Free Cash Flow Funds the $9.32 Payout

In February, Home Depot raised its quarterly dividend 1.3% to $2.33. That works out to $9.32 a year and marked its 156th consecutive quarterly cash dividend. The quarterly amount has gone up every year since 2013, rising from $0.39 then to $2.33 now.

Free cash flow pays for it. Home Depot produced $12.65 billion of free cash flow in fiscal 2025 from $16.33 billion of operating cash flow. Across 997.69 million shares, the current rate costs roughly $9.3 billion a year, or about 74% of that free cash flow. Measured against fiscal 2025 adjusted EPS of $14.69, the payout ratio is about 63%. The forward yield sits near 3.2%, and the stock trades at about 21 times earnings.

HD earnings explorer — HD Earnings Explorer — 24/7 Wall St.

Free cash flow fell 29.53% in fiscal 2025.

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Housing Turnover Will Decide This Dividend

Big renovations tend to follow home sales. Sellers fix up a house before they list it, and buyers redo kitchens after they move in. Homeowners who locked in low mortgage rates aren’t moving, so fewer of those projects happen. Existing-home sales ran at 3.99 million in September, just above August’s 3.93 million low. CFO Richard McPhail laid it out in August: