Wall Street Says Lowe’s Will Cut Its Dividend. The Company Just Raised It. Here Is Who Is Right

Wall Street had Lowe's pegged arsenic the adjacent dividend communicative to wobble. Rising rates, a softer lodging turnover backdrop, and a sluggish DIY user acceptable up a communicative wherever absorption would person to take betwixt defending the equilibrium expanse and defending the payout. Then connected May 29, 2026, the committee declared a $1.25 quarterly dividend, raising the payout from the $1.20 level held done Q1 2026 and Q4 2025. The cheque goes retired August 5, 2026. The bears present person to explicate wherefore the currency travel connection disagrees with them.

Here is the framework: a dividend chopped thesis connected Lowe's (NYSE:LOW) requires 3 things to beryllium existent astatine once. Free currency travel has to beryllium compressing toward the payout. Earnings powerfulness has to beryllium deteriorating faster than absorption tin offset. And the committee has to suffer assurance successful the medium-term recovery. Look astatine the numbers, and nary of those 3 boxes get checked.

The Cash Flow Math Does Not Support a Cut

Lowe's generated $9.86 cardinal successful operating currency travel and $7.65 cardinal successful escaped currency travel successful the fiscal twelvemonth ended January 2026. The dividend outgo the institution $2.64 billion. That is 2.9x FCF coverage, successful enactment with the 3.0x anterior twelvemonth and up of the 2.4x 2 years earlier that. Coverage is unchangeable and holding.

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On a per-share basis, trailing diluted EPS is $11.84 against an annualized dividend of $4.80. That puts the net payout ratio successful the low-40s. Even connected management's ain FY2026 adjusted EPS scope of $12.25 to $12.75, the caller $5.00 annualized run-rate would inactive permission astir 60% of net retained. Dividend Kings person been chopped from acold tighter spots than this.

Management Backed Up the Truck Where It Counts

The superior allocation awesome worthy watching is the mix. In FY2026, buybacks collapsed to $211 cardinal from $4.05 cardinal the twelvemonth before, portion dividends grew. That is simply a antiaircraft rotation, and it remains a rotation toward the astir contractually disposable return. Management is funneling shareholder returns into the astir contractually disposable signifier of currency organisation portion gathering flexibility against the macro.