All It Takes Is 1,073 Shares of Home Depot to Generate $10,000 in Yearly Dividends. Here's Whether the Payout Is Safe.

During its most recent fiscal quarter (Q2 2026, ended Aug. 2), Home Depot (NYSE: HD) collected $47.9 billion in net sales. This makes it the biggest home improvement chain in the world. Comparatively, smaller rival Lowe's generated $26 billion in revenue in its latest fiscal quarter.

This level of scale plays to the company's advantage. It supports brand recognition. A footprint of more than 2,300 stores results in unmatched distribution. And inventory availability is robust, driving demand from professional customers, an important group to cater to.

These traits help Home Depot report consistent profits, which directly benefits income investors. If you want to make $10,000 in yearly dividends from this retail stock, you need to own 1,073 shares. But is the company's payout safe?

Image source: The Motley Fool.

Home Depot's real story is dividend growth

In September, Home Depot paid its investors $2.33 per share. On an annualized basis, this amounts to $9.32. Therefore, you'd need 1,073 shares to bring in $10,000 in annual passive income. Based on the current stock price of $328, this would set you back about $352,000.

At 2.84%, the current yield is strong. This is a much better yield than what the S&P 500 (SNPINDEX: ^GSPC) offers. Some income investors want a bigger yield. After all, plenty of stocks pay more. And the 10-year U.S. Treasury yield is just under 5%, having surged over the past 12 months (as of Oct. 22).

But yield is only the starting point. Investors should also consider growth. Home Depot's payout has soared, putting more money in shareholders' pockets over time. The dividend has increased by 238% over the last 10 years, going from $0.69 per quarter to the current distribution of $2.33. And it's been 158 consecutive quarters that the business has made a payout.

If you bought the stock exactly 10 years ago, you would've captured a starting dividend yield of 2.1%. Patience paid off, though. On that same cost basis, Home Depot now generates a substantially better dividend yield of 7.1%. During that entire period, investors didn't have to do anything except sit still.

The payout is on solid ground

In the past decade, Home Depot's stock has climbed 150%. As mentioned, the dividend has risen by 238% over the same period. Investors might wonder whether the latter's higher growth rate is a sign that this isn't a blue chip dividend stock. It's important to figure out whether the payout is safe.

Home Depot historically has had no issue reporting positive earnings. This is true even though occasionally, industry or macroeconomic conditions deteriorate. During the great financial crisis, for example, perhaps the worst housing meltdown ever, management continued to pay dividends. However, the leadership team temporarily paused implementing any payout hikes, which was the correct financial strategic move.

The current environment is also worth exploring. Following a post-pandemic growth spurt that pushed double-digit revenue gains in fiscal 2020 and fiscal 2021, Home Depot has experienced a slowdown. Revenue growth has been in the low single digits. And same-store sales are expected to rise by just 1% (at the midpoint) this fiscal year.

Less accommodative macroeconomic conditions, such as stubborn inflation and elevated interest rates, have pressured operations. Housing turnover has been at historic lows for years now. And more customers might be waiting to tackle expensive renovation projects and upgrades.

Even in this unfavorable environment, Home Depot is generating sizable free cash flow. And it has continued to raise the dividend payout. This should give investors confidence.

Nothing is guaranteed in the future, of course. But it's hard to argue with the track record. Home Depot should be viewed by investors as a high-quality business that offers a safe dividend payout.

Neil Patel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Home Depot. The Motley Fool recommends Lowe's Companies. The Motley Fool has a disclosure policy.