No. 1 home improvement retailerHome Depot ( HD ) has been rebuilding sales, profits and dividends after the housing bust.
The stock has outperformed the S&P 500 this year, climbing 19% to date and hitting a new high Friday. It cleared a short, four-week consolidation during the past week, and it's up about 45% over the past 12 months.
Meanwhile, the company announced in February that it was boosting its quarterly dividend by 34% to 39 cents a share. The annual dividend yield is 2.2% at the current share price, just shy of the S&P 500 average of 2.4%.
Home Depot had held its quarterly payout steady at 22.5 cents a share from the end of 2006 until the start of 2010, as soaring foreclosures and rising unemployment eroded demand for tools, appliances and related goods. The Atlanta-based retailer's profits declined for four straight years through 2010.
But the company has since increased its annual payout steadily as profits rebounded amid a gradual recovery in home sales and construction. The three-year EPS growth rate is a solid 23%, while the three-year Earnings Stability Factor is a stellar 1 on a scale of 0 (most stable) to 99 (least stable).
In the most recent quarter, profit grew 34% from a year earlier, the best gain in two years. Sales increased 14%. By contrast, rivalLowe's ( LOW ) suffered a 10% decline in profit during the latest quarter as revenue slid 5%.
On Friday, Jefferies upgraded Home Depot to buy from hold, as rising home prices should lead to higher spending on houses.
Also Friday, former Home Depot unit HD Supply Holdings filed for an IPO, hoping to raise $1 billion. Home Depot owns a 12.4% stake in the distribution company, which is controlled by private-equity firms.