Image source: Lowe's Companies.

Both Home Depot Inc. (HD -1.65%) and Lowe's Companies (LOW -1.66%) have taken advantage of the increased ability of homeowners to make renovations and do remodeling work on their homes either on their own or with the help of a professional contractor. Recently, their shares have moved in opposite directions, but investors considering the two stocks want to know which is the better buy right now. Let's compare Home Depot and Lowe's on several important measures to see which one looks more favorable.

Lowe's and Home Depot have sometimes moved in lockstep with each other, but over time, Home Depot has picked up a key advantage over Lowe's. Over the past year, Home Depot stock has produced total returns of 11%, compared to a 5% loss for Lowe's.

Even with the differences in recent returns, the two stocks both carry similar earnings multiples. Home Depot trades at slightly less than 23 times earnings, and Lowe's is just a bit cheaper, at an earnings multiple of about 22. That gap gets a bit wider when you take future growth into account, because Home Depot's forward multiple of 20 is quite a bit higher than the roughly 17 times forward earnings at which Lowe's stock trades. That slight valuation preference gives Lowe's a slight edge.

Dividend investors won't be entirely happy with either Lowe's or Home Depot because of their subpar dividend yields. Lowe's currently pays a 1.6% dividend yield, and Home Depot is only a little bit more generous, with a yield of 1.9%. Home Depot pays out 42% of its earnings to shareholders as dividends, while Lowe's chooses to keep a lower payout ratio of about 32%.

Both companies have made efforts to increase their dividends over time. Home Depot's dividend has grown by almost 500% over the past decade, and the home-improvement leader has typically made increases except in years of particularly high financial stress in the industry. Lowe's has been even more consistent, and its track record of more than 50 years of annual dividend increases puts it among the elite Dividend Aristocrats list. All in all, both companies show similar dividends characteristics, making a pick on this basis less than obvious.

Both Lowe's and Home Depot will issue earnings reports this week, so we'll soon get a look at how well their holiday seasons went. Looking further back, though, both have shown strong growth characteristics. Lowe's has produced solid gains in its financials, including a 5% rise in sales and a 26% gain in net income in its most recent quarter. Comparable-store sales gains of 5% were fairly impressive, and Lowe's followed through on its initiative to return capital to shareholders by spending $750 million on stock buybacks during the quarter. The company repeated its guidance for the full year and said it would open as many as 20 stores by the end of the year. CEO Robert Niblock pointed to strong gains in shopper traffic and efforts to improve internal profitability for the gains and looked forward to further growth in the future.

However, many saw Home Depot's most recent quarter as being more favorable. Sales jumped more than 7%, and net income rose 12%. More importantly, the home-improvement leader boosted its outlook for full-year sales gains by a full percentage point, and comparable-store sales for its domestic stores climbed at a more impressive rate of 7.3%. Home Depot has seen great success with its strategy to capture both do-it-yourselfers and professional contractors, and efforts to make online and mobile ordering and in-store pickup options easier to use have paid off for the company.

For those seeking to pick up shares of Home Depot or Lowe's before they report earnings, the difference is whether you want a more expensive stock with slightly more promising growth prospects or are willing to sacrifice some future growth for a cheaper stock. Most growth investors would point to Home Depot's long-term advantages as reason to pick it over Lowe's.