Buy Home Depot for Its Promising Growth, Appealing Dividend

Shares of Home Depot (HD) , the world's largest retailer of home improvement products, are scheduled to trade ex-dividend Tuesday, March 8. To qualify for a dividend check, investors must own Home Depot stock before its ex-dividend date, when management finalizes its roster of shareholders to whom it will send dividend payments.

With Atlanta-based Home Depot, investors can be rewarded if they exercise some patience. Home Depot stock currently trades around $125, but it has a consensus buy rating and its average analyst 12-month price target is $145.

The reason for that analyst confidence? In Home Depot's fourth-quarter results released last month, the company reported a net income of $1.47 billion, or $1.17 per share, beating Wall Street estimates by 7 cents. This marked a 6.5% increase year over year, while revenue -- which also beat Street forecasts -- increased almost 10%.

Even amid adverse weather and pressure from the strong dollar, the company's improved merchandising continues to drive same-store sales. Those sales climbed 9% during the quarter. Improving employment and moderate wage growth are also helping consumers feel more confidence to spend on home-improving projects in the quarters ahead.

The dividend is an added bonus.

Home Depot's annual 69-cent a share dividend yields 2.2% annually. The shares also are 6.7% cheaper in the past three months.

Now's an ideal time to buy.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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