Home Depot vs. Lowe's: One Dividend Has Room to Double

"Home Depot delivered Q4 adjusted EPS of $2.72 against a $2.52 estimate, with revenue of $38.20B down 3.8% on a 13 versus 14 week calendar. Comparable sales rose 0.4%, and Pro demand plus SRS Distribution carried the quarter. CEO Ted Decker called underlying demand "relatively stable" after adjusting for storms."

"Lowe's posted $1.98 in adjusted EPS, missing the $2.07 consensus, even as revenue grew 10.9% to $20.58B on the FBM and ADG deals. Comps came in at +1.3%, online grew 10.5%, and Marvin Ellison handed out $125 million in frontline bonuses. Operating margin compressed to 9.02% from 9.43%, and net income fell 11.1%. Top line is expanding faster than profit can absorb the integration bill."

"Home Depot's quarterly payout climbed to $2.33, the 156th consecutive quarterly dividend. Free cash flow of $12.65B covered the $9.15B payout 1.38x. Coverage has tightened from 2.14x two years ago, so the runway is real but not unlimited."

"Lowe's tells a stranger story. FCF coverage sits at 2.90x on an annual basis, healthier on paper than Home Depot's. The catch is the balance sheet underneath it. Shareholders' equity finished Q4 at -$9.92B, buybacks collapsed to $211 million from $4.05B a year earlier, and Q4 FCF coverage alone fell to 0.13x. That is a company funding the payout with the calendar working in its favor."

Home Depot closed fiscal 2025 with a Q4 adjusted EPS of $2.72 versus a $2.52 estimate, while revenue declined 3.8% and comparable sales rose 0.4%. Lowe's reported adjusted EPS of $1.98 versus $2.07 consensus, with revenue up 10.9% driven by FBM and ADG deals, but operating margin compressed and net income fell 11.1%. Home Depot increased its quarterly dividend to $2.33, with free cash flow of $12.65B covering the $9.15B payout at 1.38x. Lowe's free cash flow coverage appears higher annually, but equity ended Q4 at -$9.92B, buybacks dropped sharply, and Q4 FCF coverage fell to 0.13x. Both companies face the same housing macro, but only one appears positioned to keep raising dividends without strain.

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