After deconstructing each of the 11 GICS industries, we found that there are a number of companies that we need to start building a position in from scratch. One of these companies is Lowe’s (LOW). While we wanted to start a DRIP with Lowe’s at Computershare, the problem is that their fees are more than what it would cost for us to build our position manually using Interactive Brokers.
So, we started off by picking up 6 shares of Lowe’s and have now received our first dividend of $2.10 (6 shares X 35 cents).
The first thing to note about Lowe’s is that their dividend growth rate is ridiculously high with the 10-year growth rate coming in at 22% as seen below:
The above table doesn’t reflect the most recent raise of 25% which came in with the dividend payment we just received. As we would expect, the payout ratio for Lowe’s has been steadily increasing as well though has remained steady over the past 4 years:
Since we’re just now starting to accumulate our position, we’re going to be buying around $225 in shares per month for the next 5 years. As we discussed before, we may accelerate our buying plan should the market tank and/or Lowe’s shares see a correction.
It was interesting to see that when Target took a beating recently for poor quarterly results and outlook (speculated to be as a result of their bathroom policy), Lowe’s took a hit as well. If you recall, we had a difficult time choosing between holding Lowe’s and Target because both had about the same Q-Score. We ended up choosing Lowe’s because Target had too similar of a profile as one of our existing holding, Walmart. Interestingly enough, Walmart had no reaction when Target took a beating.
Since we’ve had our pay raise for this year, we don’t need to do much else except wait and see what our raise is going to be like next year.