Here's How Many Shares of Home Depot You'd Need for $10,000 in Yearly Dividends

During the past five years, the S&P 500 index has been on a fantastic run, producing a return of about 72% (as of Sept. 11). This is a high bar for any single business to clear.

Home Depot (NYSE: HD) has lagged behind the benchmark by a wide margin. The leading home improvement company's share price has declined 7% during the past five years. Including dividends, the retail stock's total return of 6% still comes up well short of the S&P 500 index.

But it's those dividends that make this an interesting opportunity for a specific kind of investor. Here's how many shares of Home Depot you would need to own to receive $10,000 in yearly income.

Image source: The Motley Fool.

An impressive dividend streak

On Aug. 20, Home Depot's board declared a quarterly dividend of $2.33. This amounts to $9.32 on an annual basis. If you're looking to generate $10,000 in yearly income from this business, you would need to own 1,073 shares. At the recent stock price of about $309, this would set you back $332,000 in an initial investment.

This stock trades 28% off its peak right now. But this dip supports a dividend yield of 3%. That's a nice passive income stream.

What's most impressive is Home Depot's streak of dividend increases. The business has raised the quarterly payout for 17 straight years. Just in the past decade, the dividend has increased by 238%.

And Home Depot has paid a dividend in 158 straight quarters. The leadership team has proven that returning capital to shareholders is a priority. It's highly unlikely that this philosophy is going to change.

Navigating difficult times

Home Depot shares have struggled in recent years. This disappointing performance reflects the company's weak fundamentals. Growth has been difficult to achieve following a pandemic-driven demand surge.

After reporting a same-store sales decline of 1.8% in fiscal 2024, this metric rose by just 0.3% in fiscal 2025. And Home Depot expects it to increase just 1% (at the midpoint) in the current fiscal year. This isn't encouraging.

It's clear that this business is greatly exposed to macroeconomic variables. Higher mortgage rates and inflationary pressures create a headwind for households looking to spend big money on expensive upgrades and renovations. And it's hitting Home Depot's financials.

However, this is without a doubt a high-quality business. It dominates a huge and fragmented industry, with its brand name, developed supply chain, inventory availability, and omnichannel sales profile giving it the upper hand against rivals. Home Depot should continue taking market share in the long run.

And this is a consistently profitable enterprise. Even during a difficult macro environment, Home Depot posted an operating margin of 14.3% during the fiscal 2026 second quarter (ended Aug. 2). It produced $9.7 billion in free cash flow during the past six months, giving it plenty of resources to support the dividend.

Not a cheap stock

Income investors can do much worse than adding Home Depot to their portfolios. As mentioned, the 3% dividend yield is hard to overlook. And this is coming from a company with durable competitive strengths and consistent profits. The dividend yield is almost triple what the S&P 500 index pays.

Home Depot provides a healthy dividend stream. This can incentivize bullish investors to buy and hold the stock, which might make it easier to be patient enough to wait for the company's fundamentals to improve.

But given the current forward price-to-earnings (P/E) ratio of 20.4, I see no margin of safety present. If the stock traded at a multiple of 15, then the situation would be much more interesting.

Investors will have to think critically about how much they value owning a top dividend stock. If so, they should have no issue paying the valuation to capture the steady passive income stream.

Neil Patel 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.