Lowe’s Companies, Inc. LOW is a popular choice for investors who want consistent income and growth. This Mooresville, NC-based company has a strong record of dividends and solid fundamentals that provide a hedge against market swings. Thanks to Lowe’s strong cash flow generation, the company has been able to raise dividends consistently over time.
The home-improvement retailer has just hiked its dividend payout percentage, rewarding investors with a 5% jump to $1.10 per share. This brings the new annualized dividend to $4.40 per share, giving a dividend yield of 2.1%. The new dividend will be paid out on August 9, 2023, to shareholders of record as of July 26, 2023.
In May 2022, LOW increased its regular quarterly dividend by 31.3% to $1.05 per share. Lowe’s has consistently demonstrated a commitment to enhancing shareholder value with its sound fundamentals and financial strength. In the first quarter of fiscal 2023, the company bought back 10.6 million shares for $2.1 billion and paid out dividends of $633 million. During fiscal 2022, the company repurchased 71 million shares for $14.1 billion, evidence of better-than-expected operating performance and its commitment to returning excess cash to shareholders.
As of May 5, 2023, LOW had cash and cash equivalents of $2,950 million. Lowe’s generated $2,106 million in cash flow from operations in the first quarter of fiscal 2023.
Lowe’s Strategies
Lowe’s “Total Home” strategy is gaining momentum. The company provides complete solutions for all types of home repair and improvement needs. This approach is an extension of their retail fundamentals. The new strategy strengthens customer engagement and market share with an emphasis on Pro customers. The initiative involves improving online business, refurbishing installation services and enhancing localization efforts.
Management has continued to invest in omnichannel capabilities to drive growth. These include expanding the online product assortment, improving the user experience, and enhancing fulfillment. Lowe’s is also expanding its market delivery by advancing same-day and next-day fulfillment capabilities. Furthermore, its focus on perpetual productivity improvement (PPI) initiative has been successful.
Thanks to these catalysts, LOW has outpaced the industry over the last three months posting a 6.2% rise in share price, compared to the industry’s 1.8% gain. As a Zacks Rank #3 (Hold) player, Lowe’s remains a solid pick for investors seeking steady returns.
Retail Picks
We recommend three top picks in retail namely Abercrombie & Fitch ANF, Urban Outfitters URBN and Hibbett Sports HIBB.
Abercrombie & Fitch is a leading casual apparel retailer with a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 2.1% and 472%, respectively, from the year-ago reported figures. ANF delivered a negative trailing four-quarter earnings surprise of 141.2% and is poised for growth.
Urban Outfitters carries a Zacks Rank #2 (Buy). It is a retailer of fashion apparel, accessories, and footwear. The Zacks Consensus Estimate for Urban Outfitters’ current financial-year sales and EPS suggests growth of 4% and 40.6%, respectively, from the year-ago reported figures. The company broke even in the last reported quarter.
Hibbett is a sporting goods retailer, currently carrying a Zacks Rank of 2. Though the company has reported a negative trailing four-quarter earnings surprise of 13.9%, on average, the Zacks Consensus Estimate for Hibbett’s current financial-year sales suggests growth of 5.7% from the year-ago reported figure.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
