Lowe’s Dividend Has More Room Than Home Depot’s

Lowe’s paid $673 million in dividends during the second quarter, while its adjusted earnings guidance still points to roughly $12.25 per share for fiscal 2026. That spread matters more than the headline yield when housing turnover is stalled and homeowners keep postponing large renovations.

Lowe’s quarterly payout is now $1.25 per share, or $5 annualized. Against the company’s adjusted earnings outlook, that implies a payout ratio near 41%. The board also raised the dividend in May, extending a record that has earned Lowe’s Dividend Aristocrat status. Its second-quarter comparable sales increased only 0.2%, but Pro, online and home-services demand helped offset continued weakness among discretionary do-it-yourself shoppers.

Home Depot remains the stronger operator in several important respects. Second-quarter sales climbed 5.7% to $47.9 billion, while comparable sales rose 1.7%. The company said professional customers continued to outperform DIY buyers, a useful cushion because contractors tend to keep purchasing even when consumers defer kitchen remodels, flooring projects and other large-ticket work.

The problem for income investors is the cash-flow cushion. Home Depot’s quarterly dividend is $2.33, equivalent to $9.32 annually, against fiscal 2026 adjusted earnings guidance of $14.69 per share. That points to a payout ratio above 60%, before considering the company’s recent pressure on free cash flow and the financing needs created by its expansion of the SRS Distribution platform.

Neither dividend looks immediately endangered. Home Depot generated $9.7 billion of free cash flow during the first six months of fiscal 2026, while Lowe’s produced $5.9 billion over the same period after capital spending. The comparison favors Lowe’s relative to its dividend obligation, even though Home Depot generates more cash in absolute terms.

That distinction is the heart of the trade. Home Depot offers better exposure to a housing recovery because of its scale and deeper Pro network. Lowe’s offers more balance-sheet breathing room if mortgage costs stay high and comparable sales remain flat.

For investors buying income rather than a cyclical rebound, Lowe’s is the sturdier payout. Home Depot becomes more compelling if housing activity accelerates, but the dividend currently asks shareholders to trust a recovery that has not arrived.