Home Depot was the poster child stock of the pandemic, blowing away expectations for 2020 and 2021. With nowhere to go and little to do, homebound Americans worked hard at home. This means buying home improvement supplies, an area that Home Depot dominates with only his one major competitor (Lowe’s).
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But if you zoom out and look at the past 10 years, how has Home Depot fared? Was it just a pandemic, a flash in the pan? Or did it actually generate strong long-term returns for investors?
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Invested $1,000 in a home improvement store 10 years ago.
Ten years ago, Home Depot’s stock price closed at $79.40. As of this writing, it is trading at $331.97.
That means it has exploded by more than 318% over the past 10 years. This works out to an average annual rate of return of 31.8%, ignoring compound interest (if you want to include compound interest when calculating your return, use the Internal Rate of Return Calculator).
If you invested $1,000 in Home Depot stock 10 years ago, you would own about 12.6 shares. Those shares are now worth about $4,181.
Home Depot also pays a large dividend. The company’s dividend yield is currently 2.71%, but it has been in the 2% to 2.5% range for most of the past 10 years.
The S&P 500 has also performed well over the past decade, but it’s not as good as Home Depot. SPY, an index fund that tracks the S&P 500, has risen from $188.06 to $500.35 over the past 10 years, an increase of 166.06%. Meanwhile, the dividend yield has remained in the range of 1.5% to 2.2%.
home depot outlook
Yes, you’re in a pretty good position as a Home Depot investor, between its impressive price appreciation and stable dividend yield over the past decade. This is great for investors who actually invested $1,000 in Home Depot 10 years ago, but what does the future hold for Home Depot stock?
The consensus opinion of 25 equity analysts is a Buy recommendation. The average of these analysts has a 12-month price target of $376.60, or a 13.4% increase from today’s price.
why? Despite the housing market stall, the United States continues to suffer from a housing shortage. Buyers are often drawn to existing homes even when new construction is an option. Used homes that require constant maintenance and repairs, as well as large-scale renovations that are occasionally carried out.
Even the slump in housing supply caused by would-be sellers holding onto low fixed-rate mortgages is working in Home Depot’s favor. Some homeowners choose to upgrade their existing home rather than selling it as usual.
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In other words, Home Depot stands to gain, not lose, in today’s bizarre housing market.
GOBankingRates Details
This article originally appeared on GOBankingRates.com: How much is a $1,000 investment in Home Depot stock from 10 years ago worth today?
