May 31, 2025 a 07:31 am
LOW: Dividend Analysis - Lowe's Companies, Inc.
Lowe's Companies, Inc. demonstrates a robust dividend profile with a long-standing history of 41 consecutive years of dividend payments, reflecting its commitment to rewarding shareholders. The company's current dividend yield stands at a modest yet stable 2.11%, supported by a substantial market capitalisation, indicating its financial strength. Despite a minor volatility in returns, Lowe's maintains a disciplined dividend strategy.
Overview
📊 Lowe's operates in the Consumer Discretionary sector, and its dividend metrics are indicative of a stable dividend-paying entity. A high dividend history of 41 years and recent metrics reveal consistent shareholder value distribution without any recent suspensions.
| Metric | Details |
|---|---|
| Sector | Consumer Discretionary |
| Dividend yield | 2.11% |
| Current dividend per share | 4.53 USD |
| Dividend history | 41 years |
| Last cut or suspension | None |
Dividend History
🗣️ The importance of tracking dividend history cannot be overstated. It serves as a testament to a company's commitment to sharing its profits with shareholders. Lowe's has consistently paid dividends, which is a strong indicator of financial health and operational stability.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 2.30 |
| 2024 | 4.50 |
| 2023 | 4.30 |
| 2022 | 3.70 |
| 2021 | 2.80 |
Dividend Growth
📈 The growth of dividends is a key indicator of a company's future financial prospects and management's confidence in its earnings potential. Lowe's has shown a commendable dividend growth over both 3 and 5 years, reinforcing its position as a reliable dividend-paying stock.
| Time | Growth |
|---|---|
| 3 years | 17.13% |
| 5 years | 16.91% |
The average dividend growth is 16.91% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio
⚠️ The payout ratio is crucial for assessing the sustainability of dividend payments. For Lowe's, the EPS-based payout is fairly conservative, which indicates the capacity for continued payout growth or investment in business expansion.
| Key figure | Ratio |
|---|---|
| EPS-based | 36.97% |
| Free cash flow-based | 37.92% |
The EPS-based payout ratio of 36.97% and FCF-based ratio of 37.92% are within a healthy range, suggesting Lowe's dividends are well-covered by earnings and cash flows.
Cashflow & Capital Efficiency
✅ Robust cash flow and capital efficiency metrics highlight Lowe's operational effectiveness and its ability to finance dividend payouts and potential growth opportunities.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 5.22% | 4.83% | 4.98% |
| Earnings Yield | 4.72% | 6.05% | 4.74% |
| CAPEX to Operating Cash Flow | 20.02% | 24.13% | 21.29% |
| Stock-based Compensation to Revenue | 0.26% | 0.24% | 0.23% |
| Free Cash Flow / Operating Cash Flow Ratio | 79.98% | 75.87% | 78.71% |
These metrics reflect Lowe's ability to generate sufficient cash flows to support its dividend policy and investment requirements.
Balance Sheet & Leverage Analysis
🧾 Assessing Lowe's leverage is pivotal in evaluating its long-term solvency and risk profile. Despite a negative debt-to-equity ratio, the coverage and solvency ratios suggest a manageable debt level relative to operational earnings.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | -278.81% | -266.74% | -266.54% |
| Debt-to-Assets | 92.06% | 96.05% | 86.93% |
| Debt-to-Capital | 155.92% | 159.97% | 160.04% |
| Net Debt to EBITDA | 3.01x | 2.89x | 3.01x |
| Current Ratio | 1.01 | 1.23 | 1.10 |
| Quick Ratio | 0.13 | 0.14 | 0.15 |
| Financial Leverage | -303% | -278% | -307% |
Despite carrying a substantial portion of debt, Lowe's prudently manages its obligations, offering an adequate level of liquidity.
Fundamental Strength & Profitability
📉 Core profitability and efficiency metrics shed light on Lowe's operational excellence. Strong margins coupled with returns reinforce Lowe's earnings power and cost management efficiencies.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | -48.89% | -51.34% | -45.16% |
| Return on Assets | 16.14% | 18.49% | 14.73% |
| Margins (Net) | 8.31% | 8.94% | 6.63% |
| EBIT Margin | 12.70% | 13.50% | 10.48% |
| EBITDA Margin | 15.05% | 15.71% | 12.55% |
| Gross Margin | 33.32% | 33.39% | 33.23% |
| Research & Development to Revenue | 0.00% | 0.00% | 0.00% |
The consistency in margin expansion coupled with competitive returns signifies Lowe's solid competitive advantage and market presence.
Price Development
Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 5 | |
| Dividend growth | 4 | |
| Payout ratio | 4 | |
| Financial stability | 3 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 3 |
Total Score: 31/40
Rating
In conclusion, Lowe's Companies, Inc. presents itself as a reliable investment for dividend-seeking investors. The company's impressive history of consistent dividend payments and sustainable growth underscores its robust financial health. With careful management of payout ratios and solid capital efficiency, Lowe's is well-positioned to continue rewarding its shareholders. Despite some leverage concerns, the company's strong market position supports a favorable outlook, meriting a rating of 'Outperform' for dividend sustainability and growth.