HD - Could Lowe's Be in the Magnificent Seven of Dividend Stocks?
2024-03-16 07:05:00 ET
Unfortunately for fans of passive income, there isn't (yet) a "Magnificent Seven" of dividend stocks you can choose from while building up your portfolio. If such a list existed, though, the stocks in it would represent profitable companies with unusually long track records for raising their dividend payouts. To make this exclusive club, a business would also need to be able to pay out a significant portion of annual earnings without risking a dividend cut during economic downturns.
Lowe's (NYSE: LOW) might not be near the top of most investors' lists as a potential magnificent stock. It trails industry leader Home Depot (NYSE: HD) in some critical metrics, after all, including market share growth and profitability. However, it has some characteristics that make it stand out as an attractive dividend payer. Let's take a closer look.
There are precious few retailers on the list of Dividend Kings (companies that have increased their dividends for 50 or more consecutive years). That's because the industry faces sharp demand swings tied to shifts in consumer spending patterns. Profit margins tend to be low as well, which doesn't translate into especially stable earnings growth.
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Could Lowe's Be in the "Magnificent Seven" of Dividend Stocks?