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

Home Depot (NYSE: HD) is a dominant force in the home improvement market, as it generated $166 billion in revenue in the past 12 months. However, shares have underperformed investor expectations. They climbed just 6% in the trailing five-year period (as of July 28).

There is a silver lining. The retail stock can certainly cater to income investors who aren't solely after capital gains. Here's how many shares of Home Depot you'd need to own to generate $10,000 in annual dividends.

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Management emphasizes capital returns

In May, Home Depot's board of directors declared a quarterly dividend payout of $2.33 per share. On an annualized basis, each share produces $9.32 in income. This means that investors must have 1,073 shares in their portfolios to make $10,000 in passive income. At the current stock price of $345.37, those shares would cost more than $370,500.

As mentioned, the stock hasn't made for a winning investment in recent years. But its dividend yield is now a healthy 2.7%. That's almost 150% higher than the S&P 500 index's 1.09%.

The company's track record is incredibly impressive. Home Depot has paid a dividend in 157 consecutive quarters, a streak that's approaching 40 straight years. And in the past decade, the quarterly payout increased by 238%.

Consistent profits, of course, fueled capital returns. Even in a difficult operating environment, management stays focused on investors. Home Depot's operating margin was 11.9% in the first quarter (ended May 3). And the company reported $5.2 billion in free cash flow.

Cyclicality is a concern

The company's impressive dividend streak, the current yield, and the growth of that payout are all encouraging. These are compelling factors that should lead income investors to seriously consider buying Home Depot shares.

However, the retail stock performed poorly in the past five years. Macroeconomic headwinds are causing problems for the industry leader. And it's impossible to know when the tides will shift.

Home Depot's same-store sales decreased 3.2% in fiscal 2023, fell 1.8% in fiscal 2024, and increased by just 0.3% in fiscal 2025. And the leadership team expects this key metric to rise by 1% (at the midpoint) in fiscal 2026.

These are sluggish gains. And they highlight the impact that higher mortgage rates and inflationary pressures are having on households, discouraging them from tackling expensive renovations and upgrades. Until there's looser monetary policy, investors should be patient when it comes to Home Depot's growth potential.

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.