Investors looking to remodel their portfolios with equities that have delivered steady dividend income and relatively stable asset appreciation over the past year should consider the three home improvement stocks below.
In addition to solid asset appreciation, the three home improvement stocks below also continue rewarding their shareholders with long streaks of rising dividend income distributions. All three equities have been distributing dividends for more than 30 years and have not cut their quarterly payouts over the past two decades. Moreover, two of the equities have boosted their annual dividend every year and one of the three equities missed annual boosts only twice since 1999. Therefore, the three equities combined have boosted their annual dividend payout nearly 97% of the time over the last two decades.
With market capitalizations between $24 billion and $2.32 billion, these home improvement stocks represent large companies that are less susceptible to market fluctuations and generally tend to deliver stable long-term returns. Furthermore, while sourcing their inventory globally, these companies generate large portions of their revenues from the North American market, which can mitigate some of the impact of any continued trade issues with China.
These three equities might also have the ability to withstand minor economic fluctuations in the housing market. Since a significant portion of their customers are construction companies and individual contractors, all three of these equities benefit from new construction growth in an expanding economy. Alternatively, barring a major economic crash, these companies could retain most of their revenues as the market shifted from new construction to a higher rate of remodeling projects.
Just like kitchen remodel or an additional bathroom can increase the value of a house, the three home improvement stocks — sorted by one-year total returns — could improve the long-term value of an investment portfolio.
3 Home Improvement Stocks to Bolster Portfolio: #3
Stanley Black & Decker, Inc. (NYSE:SWK)
With 51 years of consecutive annual dividend hikes, Stanley Black & Decker is one of only 13 S&P 500 Dividend Kings. Dividend Kings are S&P 500 companies that have boosted their annual dividends for at least 50 consecutive years. Just over the past 20 years, Stanley Black & Decker enhanced its annual dividend payout more than three-fold, which is equivalent to an average growth rate of nearly 6% per year.
The most recent boost raised the quarterly dividend payout 4.5% to the current $0.69 distribution amount, which is equivalent to a $2.76 annual payout. At the current share price level, this annualized dividend payout corresponds to a 1.8% forward dividend yield, which is in line with the company’s own average yield over the last five years. Additionally, the current yield outperformed the 1.33% simple average yield of the overall Industrial Goods sector by more than 35%
The share price reached its 52-week low of $111.25 on December 24, 2018, which was less than three weeks into the trailing 12-month period. Despite increased volatility in 2019, the share price maintained an overall uptrend and advanced more than 40% towards its new all-time high of $160.00 in early November. Thirty days after peaking on November 5, 2019, the share price was down approximately 4% to close on Dec. 5 at $153.28. While down from its recent peak, the December 5 closing price was still more than 21% higher than it was 12 months earlier and nearly 38% above the 52-week low from late-December 2018.
The share price advancement in 2019 delivered a total return of 23.3% for the trailing one-year period. Shareholders enjoyed a total return of nearly 40% over the past three years, as well as a total return of 77% over the extended period of the last five years.
3 Home Improvement Stocks to Bolster Portfolio: #2
Home Depot, Inc. (NYSE:HD)
Home Depot’s current $1.36 quarterly dividend marks a 32% year-over-year boost above the $1.03 payout from last year. The $5.44 annualized dividend payout is equivalent to a 2.54% yield, which is 20% higher than the company’s own 2.1% five-year yield average.
The share price lost almost 25% in the last-quarter 2018 driven by the downward pressure from the overall market correction. Upon entering the trailing one-year period with a short downtrend, the share price reached its 52-week low of $158.14 on December 24, 2018. However, as the downward pressure from the overall market pullback subsided, Home Depot’s share changed direction, advanced higher and recovered all those losses by mid-2019.
The share price continued its uptrend and gained more than 50% above the Christmas Eve 2018 low before peaking at its new all-time high of $238.85 on November 18, 2018. However, after the mid-November peak, the share price pulled back slightly more than 10% and closed on December 5, 2018, at $214.10.
While slightly below the recent all-time high, the Dec. 5 closing price was still 21.7% higher than it was one year earlier, as well as 35.4% above the 52-week low from Christmas Eve 2018. However, the current Relative Strength Index (RSI) of 33% indicates that the stock might be oversold, which could trigger a buying rush that might drive the share price back towards recent peak levels. At its current level, the share price has nearly 12% room on the upside before it reaches the analysts current average target price of $239.10.
Home Depot delivered a combined total return of nearly 25% over the trailing 12 months and 75% over the last three years. Moreover, Home Depot’s long-term shareholders more than doubled their investment with a total return of 136% over the past five years.
3 Home Improvement Stocks to Bolster Portfolio: #1
Lowe’s Companies, Inc. (NYSE:LOW)
The company’s current $0.55 quarterly dividend represents a 14.6% payout hike above the $0.48 dividend amount from the same period in 2018. This new payout amount corresponds to a $2.20 annualized dividend and yields 1.9%, which is almost 11% above the company’s own 1.7% yield average over the last five years.
Lowe’s has hiked its annual dividend for the past 56 consecutive years. Just over the past two decades, the company enhanced its dividend nearly 73-fold. This level of growth converts to an average dividend growth rate of 2% per year. While the average annual growth rate declined slightly in recent years, Lowe’s still maintained its average annual dividend growth rate above 20% over the last five years.
While experiencing increased volatility since late 2017, the share price still maintained its relatively stable uptrend over the last five years. The share price dipped more than 5% in the first three weeks of the trailing 12-month period. However, after reaching its 52-week low of $85.96 on December 24, 2018, the share price surged more than 35% by mid-April 2019.
Unfortunately, the share price gave back almost all of its gains in 2019 over the subsequent 45 days. Nevertheless, the share price resumed its uptrend in late-May 2019 and advanced towards its new all-time high of $118.46 on November 27, 2019. Since peaking at its most recent all-time high less than two weeks ago, the share price pulled back 2.5% and closed on December 5, 2019, at $115.46, which was nearly 27% higher than it was one year earlier and 34.3% above the 52-week low in late-December 2018.
The share price growth and dividend income delivered a total one-year return of nearly 30%. Additionally, Lowe’s delivered total returns of 67% and 91% over the last three and five years, respectively.