Covered, steady compounding. A 2.52% yield on a 40.7% adjusted payout is covered income: $1.25 a quarter, raised in May 2026 by 4%, from $1.20. Lowe's has paid a cash dividend every quarter since going public in 1961 and has raised it for more than 25 consecutive years, and fiscal 2025 adjusted EPS of $12.28 leaves well over half of earnings retained.
Key risk: Housing turnover — fiscal Q2 2026 comparable sales rose only 0.2% as transactions fell 2.1%, and recent acquisitions added debt while guidance was trimmed to the low end of the range. Soft DIY demand is the drag on the earnings base.
Changes if: Comparable sales stay flat while the payout climbs past 40.7% of adjusted earnings, or acquisition debt forces a choice between the dividend growth rate and deleveraging. At 40.7% the cushion is comfortable today.
- ✓Payout-coverage check: 40.7% on an adjusted basis — $5.00 indicated against $12.28 of adjusted fiscal 2025 diluted EPS. Covered, with nearly 60% of adjusted earnings retained.
- ✓Yield check: 2.52% indicated — $1.25/qtr × 4 at the $198.68 close on Oct. 23, 2026. Real, earned yield for a single stock, not a special or a return of capital.
- ✓Dividend growth check: More than 25 consecutive years of increases, with a dividend paid every quarter since 1961; the latest raise, declared May 29, 2026, lifted the quarterly dividend 4%, from $1.20 to $1.25.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.