Business

Is Home Depot a good long-term investment to buy and hold?

By Dominic Diongson TheStreet

Updated June 18, 2026 4:33 PM

Home Depot is the world's biggest home improvement retailer, with a market capitalization of around $326 billion as of mid 2026. The company started with just two stores in Atlanta more than 40 years ago, but now, its footprint has exanded to more than 2,300 stores, mainly in the U.S. and the rest of North America

With record revenue in 2025, it has generated plenty of cash to finance its operations, invest in its businesses, and pay dividends to its shareholders.

Here's an overview of whether Home Depot is a good investment to buy and hold for the long term in 2026.

Home Depot's sales & growth

Home Depot has generated more than $150 billion in sales, spurred by demand from do-it-yourselfers, gardeners, contractors, and tradespeople seeking to improve their homes and businesses.

The company's expansion has accelerated in recent years, with 7 new stores opened in 2021, 6 in 2022, 13 in 2023, and 12 in 2024.

In 2023, Home Depot announced that it planned to roll out 80 new stores by 2027. Since then, it has opened 37 of these, according to its annual report. After 2027, the company projects that it will slow down its new store rollouts, building 15 to 20 stores a year.

How much of Home Depot's profit goes toward dividends?

Home Depot generates billions of dollars in cash each year and has largely returned that cash to shareholders, which has been an attractive incentive for those seeking dividend payments.

Its payout ratio - total cash dividend payments divided by annual earnings per share - was 65% in 2025. This means the company returns well over half of its profits to shareholders while retaining 35% to reinvest in its growth and ongoing operations.

The average payout ratio for companies in the S&P 500 Index was 32% at the end of 2025, according to an analysis by the Hartford Funds, an asset management firm. The average payout ratio over the past 99 years was 55.72%, and Hartford Funds added that a payout ratio of 72% could be difficult to sustain if a company experiences a drop in earnings.

"Once this happens, a company could be forced to cut its dividend. A dividend cut is often viewed in the financial markets as a sign of weakness and frequently results in a decline in the price of the company's stock," the firm said, in its report titled "The Power of Dividends: Past, Present, and Future."

How is Home Depot spending its money?

In 2025, Home Depot reported net income of $14.2 billion on record sales of $164.7 billion in sales. Its net cash provided by operating activities amounted to $16.3 billion, but by the end of 2025, its cash and cash equivalents totaled $1.389 billion.

Home Depot used its cash on capital expenditures, but its biggest expense was paying $9.2 billion in cash dividends for the year. The retailer has consistently paid dividends to stockholders for decades, since it first began trading on the New York Stock Exchange in 1981.

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How is Home Depot's stock rated by analysts?

Amazon's stock is rated a hold, or number 3 rank, by Zacks Investment Research, a Chicago-based investment research firm that compiles analyst ratings and earnings estimates. That suggests a neutral position on the stock.

For investors who own Home Depot shares, that means there's no recommendation to either buy more stock or sell any shares at the moment. "Stocks in this camp can still provide excellent upside potential. But one needs to keep a careful eye on these stocks," according to Zacks.

Zacks recommends investors focus on stocks ranked 1, or strong buy, and to an extent, those ranked 2, while stocks rated 4 or 5 should typically be avoided.

TheStreet Pro's take on Home Depot

A May 19, 2026, analysis titled "Home Depot Was Once My Greatest Investment, But Now It's a Flaming Mess," TheStreet Pro contributor Stephen Guilfoyle said that the retailer - which is a component stock of the exclusive Dow Jones Industrial Average - is "no longer a ‘blue chip' name."

Following the release of its first-quarter 2026 results, he pointed out that while the company continued to pay out billions of dollars in dividends, the retailer's short-term debt load was three times its cash position. He cited short-term debt at $3.5 billion and cash at $1.6 billion.

Guilfoyle wrote that "cash flows are decisively positive, but the balance sheet is an absolute embarrassment. One really cannot see Home Depot as a "blue chip" company when the balance sheet is simply a flaming mess. Obviously, I will not be putting any of my hard-earned dough into any kind of equity investment involving this name. My dad taught me better than that."

He added that the stock was trading below its moving averages, and that "it would be tough to buy these shares even on weakness."

Whether Home Depot cuts back on dividend payments to boost its cash pile or uses its cash to pare debt remains to be seen.

How has Home Depot's stock performed?

Home Depot's stock has risen significantly since it went public in 1981. From the close of its first day of trading through mid-June 2026, the stock gained 16,374 times. That means that a $10,000 investment back then would be valued at $163,740,000.

Home Depot's stock price history compiled by Google Finance via Google Sheets

In the past decade, though, the stock underperformed benchmark indexes. Home Depot's shares rose 250%, while the S&P 500 Index rose 350%. The stock closed at $327.48 on June 17, 2026, down almost a third from its record high of $431.37 on December 6, 2024.

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This story was originally published June 18, 2026 at 4:20 PM.