How to Buy Home Depot (HD) Stock

Invest in Home Depot stock today with Interactive Brokers as your trusted online brokerage.

Cobb County, Georgia-based Home Depot is the world’s largest retailer of home improvement products. The company owns and operates more than 2,300 stores in the United States, Mexico and Canada and stocks over 35,000 different products in each store and over 1 million products online.

Home Depot stock (NYSE: HD) is a leader among consumer cyclical stocks that follow economic cycles and it is a component of the Dow Jones Industrial Average (DJIA), the Standard and Poors (S&P) 100 and the S&P 500 indices. 

How You Can Buy Home Depot Stock Today

You can buy Home Depot stock through any reputable stock broker with access to trade stocks on the New York Stock Exchange (NYSE). Plan on buying Home Depot stock for a long term investment with the goal of capital appreciation and dividend income? You might want to open an account with a discount broker. 

The discount broker would charge you a lower commission, but you would probably not be able to access research and other premium features provided by a full-service broker. Keep in mind that how you buy Home Depot stock is just as important as where you trade, so make sure you pick the right broker.

Step 1: Pick a Broker

In order to buy Home Depot stock, you must first have a funded account with a reputable stock broker.

First, determine what you need from the broker. For example, if you need a bank account associated with your brokerage account, E*TRADE could fill this need, in addition to providing an intuitive trading platform.

You might want to consider a broker that caters to more seasoned traders like Interactive Brokers if you plan on actively trading commodities, options or other tradable assets.

Check our best online brokers below.

Step 2: Try Different Trading Platforms with Demo Accounts

One of the best ways to assess a broker’s execution services and trading platform is to open a virtual or demo account. You can trade risk-free with virtual money to check out its services and platform with most brokers.

You can also develop and try out different trading strategies without risking your money in this type of account. Opening several demo accounts with different brokers would let you assess Home Depot’s services before you open a live, funded trading account.

Step 3: Fund Your Account

Once you’ve assessed several demo accounts and selected a broker, you’re ready to fund a trading account. You’ll have to deposit some cash in a trading account if you want to buy HD stock.

Make sure to find out about the broker’s requirements and methods for funding an account. Most brokers will accept bank transfers, verified personal checks and debit cards to make an initial deposit.

Step 4: Start Buying HD Stock

Once you’ve completed all the steps necessary to buy HD stock, you might want to watch the stock for a few trading sessions to determine when to buy.

HD: Company and Stock History

The Home Depot opened its first 2 stores in Atlanta, Georgia, in 1979. These retail outlets dwarfed all hardware stores at the time with its 60,000-square foot warehouses filled with over 25,000 home improvement products. 

The stores were a retail revolution at the time. Because the focus of the stores was on the customer, trained associates could explain building and construction procedures to help their do-it-yourself customers. The stores were also a source of materials and advice for building professionals and contractors.   

Home Depot stock has made phenomenal returns for its original investors, after its initial public offering on the New York Stock Exchange (NYSE) in 1981 was at only $12 per share.

After adjusting for 13 stock splits, dividends and price appreciation, $5,000 invested in HD stock in 1981 would have bought 416.6667 shares, which would have turned into 214,127.80 shares through stock splits. This initial investment would now be worth $79,803,289.78 at today’s price of $372.69 per share.

Home Depot currently has a market capitalization of $370.19 billion. This dwarfs its largest competitors, including Lowe’s (NYSE: LOW) with a market cap of $141.40 billion, Fastenal (NASDAQ: FAST) with $38.60 billion and Beacon Roofing Supply (NASDAQ: BECN) with $5.50 billion. 

Home Depot price chart. Source: Tradingview. 

Future Outlook for Home Depot

During the most recent economic expansion, Home Depot stock has continued to appreciate along with the market. Home Depot stock has made many people wealthy over the last 40 years, which can be attributed to a number of factors, such as dividend growth, excellent management and long-term double-digit earnings. 

The stock has also had some significant declines, which you can see from the price chart above. It can be expected with cyclical stocks during recessions and stock market corrections. Over the long term, Home Depot stock has performed extremely well despite its cyclical nature. 

More recently, housing indicators show that the real estate sector is currently under pressure. Another issue Home Depot faces is tariffs that could be imposed on imported building materials. This would adversely affect the whole building and construction industry and could have a negative impact on Home Depot’s stock price. 

The Home Depot has been extremely resilient during economic downturns, showing earnings growth even in hard times. The company’s yearly diluted earnings per share over the last 10 years have shown consistent growth, from $1.34 in 2009 to $7.29 in 2018. Also, Home Depot’s yearly dividend has consistently risen every year since 1989. 

Timing is one of the most important elements that contribute to successful trading and investing. While Home Depot stock has shown great results for people who invested early, the current business cycle and softening of real estate prices could put pressure on Home Depot’s business and the entire building material sector. 

Although a decline in Home Depot’s stock price would probably be a buying opportunity, regardless of the state of the economy. This is because the company has maintained the highest return on invested capital (ROIC) in the industry and one of the highest of any company, averaging 40% per year over the long term.  

Home Depot stock price, trailing 12-month dividend payout and dividend yield over the past 30 years. Source: Macrotrends.

Why You Might Want to Buy HD

Investing in Home Depot stock presents several advantages, highlighting the company's robust market position and long-term growth potential.

• Consistently good long-term investment: Very few stocks have provided long-term investors with the consistent returns that HD stock has. This well-run company meets all the qualifications of a SWAN, or a “sleep well at night” stock, according to some analysts.  
• Industry leader: Due to the Home Depot’s business model, the company’s more than 463,000 trained associates (employees) and a solid online presence makes Home Depot one of the largest and best-run companies in the world. 
• Consistent dividend growth: The long-term returns on HD stock don’t just come from capital appreciation, but also from a steady stream of increasing dividends that the company has paid out since 1989.

Considerations Before You Buy HD

Before making an investment in HD stock, it is essential to carefully consider various factors. Here are some of them:

• Stock market and economic downturn: As a cyclical stock, Home Depot is directly affected by economic factors, especially in the construction and home building sectors.
• High stock price: Home Depot stock has risen to meet analysts’ expectations, but it appears to have stalled just above the $2370 per share price level. The sideways price action suggests the stock is consolidating, so you could wait for a breakout to signal the next major move.
• Dependence on housing market: Home Depot's performance is closely tied to the housing market. A decline in housing prices or a slowdown in new home construction can adversely affect sales, as homeowners may delay renovations, leading to decreased demand for Home Depot's products.

Is HD Stock for You?

Home Depot has made many millionaires out of ordinary investors. Nevertheless, most of the large gains in the stock have been made over a period of 10 to 25 years.

Does your investment time horizon fall within that window? HD stock would probably be a good bet for the long term. The somewhat risky outlook for the business cycle and the overall stock market should be taken into consideration since HD is a cyclical stock.  

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