Lowe’s Offers 56 Consecutive Annual Dividend Hikes, Double-Digit One-Year Total Returns (LOW)

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Posted: Apr 16, 2018 9:35 AM
Lowe’s Offers 56 Consecutive Annual Dividend Hikes, Double-Digit One-Year Total Returns (LOW)

Lowe’s Companies, Inc. (NYSE:LOW) continues to reward its shareholders by raising annual dividends after more than five decades of consecutive annual hikes, while also delivering long-term asset appreciation.

As a component of the S&P 500 Index with a market capitalization of more than $3 billion and a record of at least 25 consecutive annual dividend hikes, Lowe’s Companies, Inc. is designated a Dividend Aristocrat. Currently, only 51 companies meet all the criteria for this designation.

However, Lowe’s outperforms most peers even within this already exclusive group, as only six Dividend Aristocrats have consecutive annual dividend streaks longer than Lowe’s Companies’ current streak of 56 years. Because the company’s current streak exceeds 50 consecutive years of annual dividend hikes, Lowe’s also belongs to an even more exclusive group of only 26 companies labeled as Dividend Kings.

The company has set its upcoming ex-dividend date for April 24, 2017 and will distribute its next payout on May 9 to all shareholders of record prior to its ex-dividend date of May 9, 2018.

Headquartered in Mooresville, North Carolina and founded in 1946, Lowe’s Companies, Inc. operates as a home improvement company in the United States, Canada and Mexico. The company provides home improvement products in various categories, such as lumber and building materials, tools and hardware, appliances, fashion fixtures, rough plumbing and electrical, seasonal living, lawn and garden, paint, flooring, kitchens, outdoor power equipment, and home fashions. Additionally, Lowe’s offers installation services through independent contractors in various product categories and extended protection plans, as well as warranty and non-warranty repair services. As of March 24, 2017, the company operated 2,365 home improvement and hardware stores. In addition to its stores, the company also sells its products through the Lowes.com and Lowesforpros.com websites and through mobile applications.

The company’s current $0.41 quarterly payout is 17.6% higher than the $0.35 quarterly distribution from the same period last year. The annualized $1.64 dividend for 2018 is equivalent to a 1.9% forward yield, which is almost 24% above the company’s own 1.5% average yield for the past five years. While the company’s current sub-2% yield is not as high as double-digit-percentage yields in some other sector, such as real estate investment trusts (REITs) or Asset Management sectors, the 1.9% yield trails is only 10% below the average yields of the entire Services sector and the Home Improvement market segment.

In addition to a long streak of annual dividend hikes, Lowe’s also continues to reward investors with above-average growth rates. Over the past two decades, the company increased its annual dividend amount more than 74-fold by enhancing its annual payouts at an average rate of 24.1% per year. Over the past 10 years, the annual dividend advanced five-fold at an average rate of 17.4% and more than doubled over the past five years by growing at nearly 20% per year.

At the beginning of the trailing 12 months, the company’s share price declined nearly 12% from $82.17 towards its 52-week low of $72.61. However, the share price reversed direction after hitting the 52-week low and advanced nearly 50% before reaching its 52-week high of $107.40 on January 26, 2018. At that point, the share price was trending almost 31% above the $72.61 price from April 7 ,2017. However, the share price tumbled with the rest of the markets and dropped almost 18% from its recent peak to close at $88.24 on April 6, 2018. This closing price was 7.4% higher than it was one year earlier, 21.5% above the 52-week low from August 2017 and 127% higher than it was five years earlier.

While Lowe’s does not have a high dividend yield or a high share-price growth rate, it offers its shareholders a balanced combination of steadily rising dividends and moderate asset appreciation. These two factors rewarded the company’s shareholders with an 11.2% total return over the past 12 months, a 24.5% total return over the past three years and a 147% total return over the past five years.