Lowe's has raised its dividend 58 consecutive years © LOWE'S COMPANIES 2019 annual report cover
Lowe's has raised its dividend 58 consecutive years © LOWE'S COMPANIES 2019 annual report cover

Dividend Aristocrat Lowe's Companies surprised many investors last week by not raising its dividend. Instead of announcing its annual increase the home improvement company will pay a 55 cent dividend for the fifth consecutive quarter.

Like many other US companies Lowe's seems to have postponed its annual dividend increase because of the COVID-19 pandemic.

Normally, Lowe's always increased the dividend after four quarters around this time. This year, the company appears to have postponed the dividend hike, following many other publicly traded U.S. companies. Another Dividend Aristocrat that did not announce its annual dividend hike earlier this year is oil major Exxon Mobil (XOM).

In 2019 Lowe's increased the quarterly dividend by 14.6 percent to $0.55 per share, marking the 58th consecutive year of dividend increases by the proud Dividend Aristocrat. It goes without saying that Lowe's will most likely announce a higher dividend later this year, notwithstanding the fact that the stock hit its all-time high this week after an unprecedented strong recovery from its low point just over two months ago.

Apart from the fact that the Lowe´s share is at its highest price ever, investors will also be surprised at the absence of a dividend increase, given the very strong and consistent dividend growth of this Dividend Aristocrat in recent years.

Indeed, Lowe's increased the dividend by at least double digits every year for the past 10 years. The smallest dividend increase since 2010 occurred in 2013, when the dividend increased by only 12.5%. The largest dividend increase was announced by Lowe's in 2014 with a growth of 27.8%. With an average dividend growth of 19.8% over the last 10 years, hardly any Aristocrats come close.

In addition to paying out dividends, Lowe's is also known for buying back own shares. An important part of the free cash flow goes annually to buybacks. For example, according to our calculations, in 2019 a total of 4.8% of the number of outstanding shares was purchased by Lowe's, which so far repurchased 1.5% of its own shares in 2020 (reference date 1 May).

Dividend Aristocrat Lowe's stock chart
Lowe's stock more than doubled from its low of $60 on March 19

Due to the very strong price increase in recent weeks, the dividend yield has fallen to 1.7% at a current stock price of $ 128.68. The crazy thing is that Lowe's stock slipped to a low of exactly $ 60 on March 19 (see chart above) when the COVID-19 panic was highest among investors. Since then, there has been a massive recovery and it even hit a new all-time high of $ 133.39 yesterday, on June 3. We are convinced that Lowe's will increase the dividend for the 59th consecutive year later this year. Lowe's Companies has been paying a dividend to shareholders every year since its IPO in 1961.

The next dividend of $ 0.55 per share will be paid on August 5, 2020, to shareholders of record as of July 22, 2020. The ex-dividend date for the next dividend is July 21, 2020.

Dividend Calendar

Look at the complete list of upcoming events
Ex-date Ticker Yield YTD hike
Dec 06 CTXS 1.7% 5.7%
Dec 06 CI 1.8% 9900.0%
Dec 06 WRB 0.6% 8.3%
Dec 07 AEE 2.6% 6.8%
Dec 07 AME 0.6% 11.1%
Dec 08 KIM 2.9% 6.3%
Dec 08 NEM 3.7% 37.5%
Dec 09 BDX 1.4% 4.8%
Dec 09 ADP 1.8% 11.8%
Dec 09 NTRS 2.2% 0.0%