Home Depot and Lowe's Have Both Raised Their Dividends for 17 Straight Years. Which Stock Is the Smarter Buy Heading Into Earnings?

Home Depot (NYSE: HD) and Lowe's (NYSE: LOW) have long dominated the home improvement space in the U.S. In past decades, they drove massive growth and dividend returns for their investors as they expanded nationwide.

Although Home Depot operates in Canada and Mexico, both have become slower-growth markets amid saturation in the U.S. market and limited international success. Thus, the rapid growth days for both companies are likely over, which may reinforce the perception that they have become income stocks better suited for wealth preservation.

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Lowe's hiked its payout every year for several decades. The same is true for Home Depot, though it has raised its dividend for only 17 straight years, having paused increases between 2006 and 2010. Still, each company has a long dividend history.

Knowing that, investors may look for other ways to differentiate between the two retail stocks. As each company reports for the second quarter of 2026, investors might want to lean toward Lowe's, and here's why.

Why Lowe's?

At first glance, income investors might favor Home Depot for its dividend. It offers an annual payout of $9.32 per share, taking the dividend yield to 2.7%.

Lowe's $5.00 per share yearly dividend yields 2.2%. However, its last payout increase hiked the dividend by more than 4.2%, significantly more than Home Depot's 1.2% increase.

Moreover, investors may experience higher overall growth from Lowe's stock, as they have over the last five years. In recent years, Lowe's has worked to make its supply chain more efficient, improve store layouts, and tighten inventory management.

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Those efforts seem to have paid off, as Lowe's is now posting higher net sales growth. In the first quarter of 2026, its net sales rose by 11%, far outpacing Home Depot's 5% increase.

Analysts expect this trend to continue in Q2. They forecast a 9% increase in net sales for Lowe's, higher than the 4% expected for Home Depot.

Despite those results, the P/E ratio may be the number that makes Lowe's stock an obvious buy. Currently, Lowe's trades at an 18 P/E ratio, well below Home Depot's 24 earnings multiple. This puts Lowe's on track to offer investors higher growth at a lower cost.

Choose Lowe's over Home Depot

Between the two home improvement stocks, Lowe's is probably the smarter buy right now.

Indeed, neither stock is a great choice if one is looking for rapid growth. Still, both stocks should preserve one's wealth while offering a cash return, and dividend investors may gravitate toward Home Depot given its higher dividend yield.

Nonetheless, Lowe's dividend is growing faster, as is its stock price. Additionally, Lowe's is on track to post higher net sales growth. Finally, with its 18 P/E ratio, Lowe's investors will be buying faster growth at a lower cost, making it more likely it will continue to yield higher returns over time.

Will Healy 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.