How Much Will Home Depot Pay Out in Dividends in 2025?

Source The Motley Fool

Dividends combined with capital appreciation provide investors with a total return. However, it's vital to ensure a company can afford to continue making payments. Fortunately, it's a straightforward calculation for the year-ahead dividend payments, although you'll have to make certain assumptions.

Home Depot (NYSE: HD), the world's largest home-improvement retailer, has been a reliable dividend provider. It has made payments for about 35 straight years.

How much will the company pay in dividends next year? And can it afford the dividend expense? Let's do some basic math.

Someone holding cash with a piggybank on the side.

Image source: Getty Images.

Calculating the payout

Home Depot currently pays $2.25 per share in a quarterly dividend. The share count was 993.3 million and 991.6 million at the end of the first and second quarters, respectively. That accounts for share repurchases and the timing of stock-based compensation to employees.

For the first six months of the current fiscal year, covering the period that ended on July 28, the company's dividends totaled $4.5 billion. Fortunately, the $9.3 billion in free cash flow easily covered the payment.

What about calendar 2025's dividends? The board of directors has raised dividends annually since 2010, including a sharp 7.7% boost last year.

Therefore, assuming a 5% increase will likely start with December's payout seems reasonable. That works out to a $2.36 quarterly rate. Assuming the share count remains flat, 2025's dividends would total $9.4 billion.

While sales have slumped due to macroeconomic factors such as weary consumers and sluggish home sales, the company has maintained profitability. Same-store sales fell 3.3% in the second quarter, but adjusted diluted earnings per share were essentially flat: $4.67 versus $4.68 a year ago.

However, home sales will eventually rebound, and owners will perform major renovations again. It's a question of timing, but Home Depot will remain in a prime position to benefit when it happens. In the meantime, shareholders can enjoy the 2.3% dividend yield, roughly 1 percentage point higher than the S&P 500's average yield.

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Lawrence Rothman, CFA 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.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
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