Home Depot (HD +1.75%) shares haven't been performing well. In the past five years, they have risen only 5% (as of Aug. 6). Following a pandemic-fueled surge in demand that saw revenue rise double-digit percentages in fiscal 2020 and fiscal 2021, the home improvement giant has been dealing with tighter macroeconomic conditions that have negatively impacted the business.
However, Home Depot continues to prioritize its investors, having raised the dividend payout in 17 straight years. And it's set to report second-quarter 2026 financial results on Aug. 18, which will provide a fresh glimpse at how the company is performing.
If you're looking to buy a Dow Jones stock, should you choose Home Depot? Or does Walmart (WMT -0.20%) deserve your hard-earned capital?
Image source: The Motley Fool.
Home Depot is committed to shareholders
Home Depot has shown that it's a cyclical business. In recent years, higher interest rates and inflationary pressures have hurt the company's growth profile. Home Depot's same-store sales (SSS) decreased 3.2% in fiscal 2023, fell 1.8% in fiscal 2024, and rose by just 0.3% in fiscal 2025. And they are expected to increase 1% (at the midpoint) this fiscal year.
This weaker trend hasn't gotten in the way of the leadership team's unwavering commitment to shareholders. Home Depot currently pays a quarterly dividend of $2.33 per share. As mentioned, the business has increased the payout in 17 consecutive years. If that wasn't impressive enough, consider the fact that the company has now paid a dividend in 157 straight quarters, translating to nearly 40 years.
Despite softer sales momentum, Home Depot has never had an issue generating consistent profits. Even in the depths of the great recession, the business posted positive free cash flow in every single fiscal year from 2008 through 2010. This allows Home Depot to fund its operations, while also returning capital to shareholders.
The company is set to report financial results for the fiscal 2026 Q2 on Aug. 18. Besides SSS, investors should pay close attention to customer spending on big-ticket items and updates to guidance.
NYSE: HD
Key Data Points
Walmart is operating at a higher level
Walmart, the world's largest retailer, holds up well during difficult economic times. When it reports financial results for Q2 2027 on Aug. 20, sell-side analysts expect revenue and diluted earnings per share to rise 6.3% and 8.8%, respectively, year over year.
There's no doubt that this business is performing better than Home Depot. It's not cyclical, as consumers favor its low prices and massive assortment of merchandise across all environments.
"When I look at the consumer, especially here in the U.S., they're telling us, they're feeling some pressure and they're looking to Walmart for value," CEO John Furner said on the Q1 2027 earnings call.
The company's evolution also deserves some credit. Walmart has made a strong push into online shopping, leveraging its broad physical footprint to support omnichannel capabilities.
Its Walmart+ membership has found notable success, introducing a recurring revenue stream. And with its Walmart Connect platform, the business generates surging advertising sales. These are certainly high-margin activities that can propel the bottom line.
NASDAQ: WMT
Key Data Points
The better Dow stock depends on what factors investors care about
Investors choosing between these two retail stocks have a lot to think about. It all comes down to what variables matter most in your decision-making process.
Walmart continues to operate at a high level. Investors worried about a recession will view this business favorably. It has increased the dividend in 53 straight years, crushing Home Depot's track record. And shares have climbed 130% in the past five years, a fantastic run. Walmart has earned the title of Dividend King, which is any company that has increased its annual dividend for at least 50 consecutive years. 1 2
Home Depot trades at a much cheaper valuation. And it's not even close. Its price-to-earnings (P/E) ratio of 24.8 represents a 37% discount to Walmart's more expensive 39.3 multiple. Consequently, Home Depot's dividend yield of 2.67% is much higher. This provides a nice income stream while shareholders wait for the fundamentals to improve.
Neither of these stocks looks particularly interesting right now, in my view. However, it's obvious that Home Depot is the better choice for dividend investors.
