Why Home Depot Stock Popped by Nearly 4% on Friday

Key Points

• The well-known retailer maintained its dividend policy.

• It declared a fresh dividend that matches the previous two payouts.

• 10 stocks we like better than Home Depot ›

Shareholders in Home Depot (NYSE: HD) are getting more coins in their pockets, and they reacted happily to this news on Friday. As a group, they pushed the DIY retailer's stock up by almost 4% during that trading session, a lift that was more than good enough to beat the S&P 500 index's rather frothy 1.5% increase.

Extending the long history of the dividend

Just after market close on Thursday, Home Depot announced that its board of directors had declared a fresh quarterly dividend of $2.30 per share. This will be dispensed on Sept. 18 to investors of record as of Sept. 4. At the most recent closing share price, the dividend yields 2.2%.

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In its brief press release trumpeting the new payout, Home Depot took pains to mention that this will be the 154th consecutive quarter it has paid a dividend to its shareholders.

That, combined with the retailer's habit of raising it every quarter, makes it attractive for income investors. Many also like the fact that the payout's yield is well above the 1.2% average of the stocks in the S&P 500 index.

A decent enough quarter

The announcement came only a few days after Home Depot unveiled its second-quarter earnings.

For the most part, investors found the company's performance encouraging if not spectacular -- total revenue rose by almost 5% on a year-over-year basis, although global same-store sales growth felt sluggish at a 1% increase. Home Depot's results were more or less in line with analyst expectations. Management's comments about pricing and generally bullish guidance also helped sentiment.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool has a disclosure policy.