Image source: Visa.

The 30 stocks in the Dow Jones Industrials (^DJI 0.56%) represent the cream of the crop among U.S. companies. But the breadth of the Dow goes far beyond the industrial sector, as it includes stocks from many different sectors. Card-network trailblazer Visa (V -0.59%) and home-improvement retail giant Home Depot (HD 0.74%) are both leaders in their respective fields, but which one makes the better Dow stock? Let's compare Visa and Home Depot on several important metrics to see which one takes the title.

The Dow's history goes back more than a century, but neither Home Depot nor Visa has a very long tenure in the average. Home Depot entered the Dow in 1999 after having vaulted to success and prominence in the 1980s and 1990s. The company helped redefine the big-box retail concept, and it was fitting that Home Depot ended up coming into the Dow at the same time that long-ailing retailer Sears Roebuck was taken out of the average.

Visa hasn't even had its stock traded on public exchanges that long, having had its initial public offering in 2008. The card network company came into the Dow in 2013, and even though most people see Visa as a financial stock, its payment-network technology arguably made it a replacement for the exiting Hewlett-Packard and its flagging hardware business. Even though it hasn't been available for investment for very long, Visa's history dates back to the 1960s, and that arguably puts it at least on a par with Home Depot for longevity.

Neither Visa nor Home Depot has a dividend yield that matches up to the average among Dow stocks. However, Home Depot's yield of about 2% easily tops the 0.8% Visa currently pays.

The difference in yields doesn't indicate any major disparity in the two companies' ability to pay a dividend. Home Depot pays between 40% and 50% of its earnings to shareholders in the form of dividends. For Visa, the ratio of dividends to earnings is less than 20%. That shows how Visa's stinginess is a conscious choice from the company rather than motivated by necessity.

Both companies have also done a good job of growing dividends over time. Visa's payout has more than quintupled since 2008, and the company has made seven increases to its quarterly payout over that span. Home Depot has a longer history of dividend growth, and it has boosted its dividend almost sixfold in the past decade, including a 25% rise in early 2015. Home Depot wins on the dividend front, but it will be interesting to see if Visa seeks to catch up.

Growth and valuation
Investors have fairly high hopes for Home Depot and Visa in terms of their future growth, and the stocks carry reasonably high valuations as a result. Visa trades at 24 times trailing earnings, but investors expect it to grow its earnings at an average annual rate of about 17% over the next five years. That means earnings in 2021 could be more than double what they are now, so even some reduction in its earnings multiple would still leave room for share-price growth.

Similarly, Home Depot currently has an earnings multiple of 21, and investors are currently projecting about a 14% growth rate for earnings between now and 2021. That growth rate would leave Home Depot's earnings in five years at slightly less than double its current earnings leve, but the lower current multiple offsets the slower growth to some extent.

Both Visa and Home Depot have attractive elements, and they compare relatively evenly on these three criteria. For many, the decision about which one makes a better Dow stock rests on whether you think the housing market has a better chance of continuing its long-term growth trajectory than the electronic payments industry. With such fundamentally different businesses, both Home Depot and Visa could claim places in a well-balanced portfolio.