Lowe’s is one of only 9 Dividend Aristocrats from 1989 that has increased its dividend every year to the present. The business has not changed substantially (other than scale) from what it was 25 years ago.
Not only is Lowe’s a Dividend Aristocrat, it is also a Dividend King. The Dividend Kings are a select group of stocks with 50+ years of consecutive dividend increases; the ‘best of the best’.
Fantastic 25 Year Return
Shareholders of Lowe’s have done very well over the last 25 years. The stock has compounded at over 19% a year, for 25 years. An investment in Lowe’s 25 years ago is worth over 88x the initial investment amount (including dividends). The low cost S&P 500 Mutual Fund VFINX is up 11.36x (including dividends) over the same period.
Lowe’s was a Dividend Aristocrat in 1989
Lowe’s had paid increasing dividends for 27 consecutive years in 1989. The business was already a Dividend Aristocrat. Lowe’s is another example of a Dividend Aristocrat that has provided not only safety, but fantastic returns over a long period of time.
1989 Lowe’s Key Stats
- Consecutive Years with Dividend Increase: 27
- P/E Ratio: 11.13
- Payout Ratio: 25.14
- Dividend Yield: 2.2.6
- 10 Year Dividend/Share Growth: 9.70%
- 10 Year Revenue/Share Growth: 13.68%
- 10 Year Volatility: 38.15%
The key statistics of Lowe’s show the business was unloved by Wall Street with a P/E ratio of only 11.13. At the same time, the company had impressive 10 year revenue per share and dividend per share growth. Lowe’s high volatility shows there was uncertainty about the business, and the share price bounced around quite a bit.
1988 was the first year that Lowe’s home center business sales eclipsed contractor business sales. Today, Lowe’s continues to grow on the strength of its big box home center stores. Comparable store sales were up over 4% in 2013. Lowe’s operates throughout North America, with the majority of its stores in the US. Lowe’s future growth will come predominantly from growth in the North American housing market.
Lowe’s in 1989 Compared to Today’s Top 10 Dividend Stocks
1989 Lowe’s would rank as a ‘buy’ based on the 5 buy rules from the 8 Rules of Dividend Investing. 1989 Lowe’s would rank 9th out of a possible 106 stocks with 25+ years of dividend increases today. 1989 Lowe’s would rank significantly higher if it did not have such high volatility. The volatility calculation used for 1989 Lowe’s may be somewhat inaccurate, as historical price data was available only to 1985, so a 10 year volatility comparison was not possible.