3 Home Improvement Companies Offer Double-Digit Dividend Growth Rates

Three home improvement giants have offered their investors annual dividend increases at double-digit compound annual growth rates (CAGR) for decades.

Expansion of the U.S. economy would increase demand for building materials and tools, which would kick-start the housing market and would directly benefit these three companies

While some companies might profit from the Trump administration’s expected infrastructure spending, these three companies would benefit more from the private housing and construction markets. New housing might remain at current levels for a little longer, but some of the smaller home improvement and construction projects could begin sooner.

This expansion would make these three stocks prime candidates for growth, increased earnings and capital appreciation.

Home Depot, Inc. (NYSE:HD)

Home Depot is the world’s largest home improvement retailer, with more than 2,200 stores across North America.

The company’s share price experienced some volatility during the last year with several up-and-down cycles. Overall, the share price grew 27% from the 52-week low in February to reach $139.00 at the beginning of August 2016, which was a 52-week price high at that time. After that high, the price declined 14% by early November. Since November, its share price recovered completely and reached a new 52-week high during trading on January 25, 2017. Over the last five years, Home Depot’s share price has tripled.

Home Depot has been paying a dividend for 30 years. Since 1996, the company failed to increase the annual dividend payout only twice — in 2008 and 2009. Dividend payout remained flat for those two years. Since 2009, the company managed to increase the dividend at an average 17.4% CAGR.

Lowe’s Companies, Inc. (NYSE:LOW)

Lowe’s Companies is a home improvement company with more than 2,300 stores in United States, Canada and Mexico. As of the most recent annual report for fiscal year 2015, Lowe’s had over $59 billion in sales.

The company’s stock performed well early in 2016. The share price increased 33.6% from the 52-week low in February 2016 to the 52-week high in mid-July, but lost almost all those gains afterwards and fell to just 5% above the year’s low.

After that decline, its share price reversed course and regained 16.5% by early December 2016, only to decline again. As of January 25, 2017, the share price was $73.06, which is 12.6% lower than the 52-week high in July.

Lowe’s Companies has increased annual dividend every year since it started paying a dividend 55 years ago. Since 1997, its annual dividend payout increased at an average annual rate of 22.9%.

The current quarterly payout of $0.35 equates to a $1.40 annual dividend and a 1.9% yield, which is 27% higher than the trailing average five-year yield.

Stanley Black & Decker, Inc. (NYSE:SWK)

Stanley Black & Decker manufacturers industrial tools, hand tools and household hardware. The company also provides security products and locks.

The company’s share price exhibited steady growth without major volatility in 2016. Between the 52-week low in February and the 52-week high that occurred during trading on July 12, 2016, the price increased 42%. On January 25, 2017, the share price closed at $124.46, which is 1.8% below the 52-week high and 40% above the 52-week low.

Stanley Works — the predecessor of Stanley Black & Decker, Inc. — has been paying dividends since 1877 and increasing dividends consecutively for the last 49 years. Since 1996, its dividend increased at an average 13.5% CAGR. Thus, the annual payout increased more than twelve-fold over the last 20 years.

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