Home Depot Stock Offers 3% Dividend Yield on 28% Dip

The S&P 500 index has delivered a substantial 72% return as of September 11, but Home Depot (HD) has significantly lagged, with its share price falling 7% over the last five years, resulting in a total return of just 6% including dividends. Despite this underperformance, the company's stock is currently trading 28% below its peak. This dip has elevated Home Depot's dividend yield to 3%, a notable passive income stream for investors.

To generate $10,000 in annual dividend income, an investor would need to own approximately 1,073 shares of Home Depot. At a recent stock price of around $309 per share, this would require an initial investment of approximately $332,000. The company's quarterly dividend, declared on August 20, stands at $2.33, equating to an annual payout of $9.32 per share. Over the past decade, Home Depot's dividend has seen a significant increase of 238%. While same-store sales saw a slight decline of 1.8% in fiscal 2024, it is projected to rise by 0.3% in fiscal 2025 and 1% in the current fiscal year. Home Depot posted an operating margin of 14.3% in the second quarter of fiscal 2026.