Lowe's Companies (LOW), again

That sentence is easy to say about any stock that has fallen. Most of the time it is wrong, because stocks usually fall for a reason. So we did what we always do and ran the five boxes on today's numbers.

The scorecard, then and now

In July, Lowe's scored an 88. Today the same company scores a 92, our fifth 92 and the highest a repeat buy has ever scored.

• Pays: 54 years of dividends, never cut. 20/20, unchanged.
• Raises: 54 straight annual increases, a Dividend King. 20/20, unchanged.
• Safe: the $5.00 annual dividend is 42% of trailing earnings, the same 42% as July. Earnings have not moved. 20/20, unchanged.
• Undervalued: today's yield is 42% above the stock's own five-year median. In July it was 33% above. 20/20, unchanged, but with more room to spare.
• Yield that matters: 2.66%, up from 2.37%. That crosses the 2.5% line, and this box goes from an 8 to a 12.

Notice what changed and what did not. The dividend is the same. The earnings are the same. The 54-year record is the same. The only thing that moved is the price, and a lower price on the same dividend means a higher yield, which is the whole reason the score went up. Nothing about the business got worse in the past two months; the market simply marked it down another 11%, which put it within about 1% of its 52-week low today.

Where the "undervalued" number comes from this time

In July we took the five-year average yield from a research report. This week, as we did with Bank OZK, we computed it ourselves: 1,254 daily closing prices for Lowe's going back to September 2021, and every dividend it paid along the way, giving the trailing yield on each of those days. The median is 1.875%. Today's indicated yield of 2.66% is 42% above it.

For anyone checking our work: over those five years the yield ranged from a low of 1.07% to a high of 2.96%. Today's 2.66% sits near the top of that range, which is another way of saying the stock sits near the bottom of its own five-year valuation.

A correction to our July post

We publish everything, and that includes our mistakes. In the week seven write-up we said Lowe's "raised the dividend about 8% in its most recent bump." That was wrong. The actual payment record shows the May 2025 raise was 4.35% ($1.15 to $1.20 a quarter) and this year's raise, effective with the August payment, was 4.17% ($1.20 to $1.25). The last three raises have all landed between 4% and 5%.

This matters because the growth rate feeds our income projection on the home page. We had Lowe's growing its dividend at 8% a year in that model. As of today it is 4.2%, which is what the company has actually been doing. That lowers the long-run projected income line a little. We would rather show you a smaller number that is right than a bigger one that is not.

The honest part

Lowe's is now our largest position. With two buys it makes up about 12.6% of the portfolio, edging past NextEra at 11.7%. And it sits in consumer discretionary alongside Tractor Supply and Nike, so that one sector is now about a quarter of everything we own. That is more concentration than a textbook would like. We are comfortable with it for the same reason we gave in week eleven: the rules do not require a new name every week, and when nothing on the screen beats a King trading near its five-year low, buying more of the King is the rule working, not the rule bending. But it is a real tilt, and the next few buys should lean elsewhere.

Why is it cheap? The same reason as July, only more so. Housing turnover is frozen by mortgage rates, big renovation projects are on hold, and Lowe's most recent quarter showed sales roughly flat. The market is pricing a home-improvement retailer for a long housing slump. We are pricing a 54-year dividend record that survived 1974, 1981, 1991, 2001, 2008, and 2020, paying out 42 cents of every dollar it earns. Both views can be right about different things; we are only claiming to be right about the dividend.

The yield is still the weak box. 2.66% is better than 2.37%, but it is the lowest-scoring box on the card and below most of what we own. We accept that for a 42% payout with decades of raises behind it.

Our first T. Rowe Price dividend

Today the portfolio received its first dividend from T. Rowe Price, bought in week eight: $1.16, which is $1.30 a share on our 0.8928 shares. That is exactly the rate the company published, so no surprises, and it brings lifetime dividends collected to $5.60. Under our pooled approach that money does not sit around: $1.14 of it went straight into today's Lowe's buy. The remaining two cents will ride along with next week's purchase.

A one-cent bookkeeping note

Last week we reported the Bank OZK buy as $101.89. The brokerage statement shows $101.90. The extra penny was a cent of our own deposits that had been sitting in the account uninvested since the summer, and the brokerage swept it into the trade. We have corrected the ledger, the way we always do: the original entry stays visible, a reversing entry sits next to it, and the corrected entry follows. The result is that contributed capital now reads exactly $1,600.00 for sixteen $100 deposits, which is how it should have read all along.

The numbers on this week's buy

• Invested: $101.14, which is the usual $100 plus $1.14 of dividends. This is the third time our own dividends helped pay for the week's pick.
• Bought: 0.5386 shares at $187.79, bringing our Lowe's position to 1.0135 shares
• New annual dividend income added: about $2.69 per year
• The portfolio after 16 weeks: $1,600.00 contributed, $5.58 reinvested, worth about $1,509.99, throwing off about $56.38 a year, roughly $4.70 a month
• Fourteen holdings across ten sectors. No new names this week. Technology is still the one we don't own.

The portfolio is worth about 6% less than we have put into it, down from 4.5% under last week. Lowe's itself is down about 5% on our blended cost, NextEra about 12%, and the paper losses are broad rather than concentrated in one name. We mention it because we publish everything, and because a portfolio that only ever showed gains would be lying to you about what investing feels like in month four. The income line went up again, from $53.68 to $56.38 a year, and every one of the fourteen dividends behind that number is intact.

The running totals are on the portfolio page, and the slider lets you drag through time to watch the income grow.

That's week sixteen. A repeat buy, a higher score, a correction, and our first T. Rowe Price check. See you Monday for pick number seventeen.

This is not financial advice. We're individual investors sharing our own approach and the reasoning behind our own real decisions, not licensed advisors. We own, or are buying, the stocks we write about in this series. Do your own research and consider speaking with a financial professional before investing. Dividend figures, yields, share counts, and prices are accurate to the best of our knowledge as of the publish date and will change over time.