These Two Retailers Outperform Target

Two Market-Beaters From An Overlooked Subsector

May 30, 2025

Target Corporation ($TGT) is a retail stock that gets a lot of attention as a dividend staple or a “must-own” business.

I actually reviewed Target stock several years ago when shares slipped from $250 down to $150. I didn't like it then. And with Target now trading below $100 per share, I'm still not interested.

Fortunately, you don't have to buy a stock simply because it's popular.

Here are two lesser-discussed retailers that not only outperform Target stock, but also beat the market in general.

These businesses are Lowe's Companies, Inc. $LOW ( ▲ 2.04% ) and The Home Depot, Inc. $HD ( ▲ 1.76% ) .

Both of these hardware store chains consistently beat the market and inflation, yet the two companies seem to get very little investor attention compared to more conventional retailers like Walmart or Target.

Let’s dive into each of them!

Lowe's Companies, Inc. ($LOW)

Did you know that Lowe's Companies, Inc. was founded over 100 years ago?

Or that Lowe's Companies, Inc. has raised its dividend every year for the past 61 years?

Lowe’s operates a chain of home improvement stores throughout the United States, and the company has consistently delivered market-beating returns as well as inflation-beating dividend growth.

Here are the key metrics:

  • Forward PE ratio of 18.35

  • 2.05% starting dividend yield

  • 5-year dividend CAGR of 15.90%

  • Payout ratio of 38.85%

  • 10-year average annual total return of 14.43%

Lowe's is one of those stocks you rarely here about. Yet, the business has a valuation lower than the S&P 500 while also delivering market-beating returns. On top of this, Lowe’s offers inflation-beating dividend growth.

Even at a reduced long-term compound annual dividend growth rate of 11%, investors would still double their yield on cost in a little over six years.

The Home Depot, Inc. ($HD)

Did you know that approximately 90% of The Home Depot’s store managers started as hourly associates?

Or that The Home Depot is the world’s largest home improvement retailer?

The company was founded in 1978, and there are now more than 2,300 Home Depot stores across North America, with operations in Canada, Mexico, and the United States.

Here are the key metrics:

  • Forward PE ratio of 24.54

  • 2.50% starting dividend yield

  • 5-year dividend CAGR of 10.15%

  • Payout ratio of 45.79%

  • 10-year average annual total return of 15.37%

The Home Depot trades at a higher valuation than Lowe’s. But, The Home Depot has also delivered better 10-year returns.

Additionally, The Home Depot’s compound annual dividend growth rate of 10.15% is impressive. And even if this slowed to 7.5%, investors would still double their starting yield in less than 10 years.

Both of these businesses are interesting market-beaters that never seem to get much Wall Street attention. The Home Depot offers a slightly higher starting yield and better 10-year performance. While Lowe's Companies has the lower valuation and faster dividend growth.

I’m a little biased towards Lowe's Companies because I already own the stock.

But, if you are looking for a market-beating retailer with inflation-beating dividend growth, both Lowe's Companies and The Home Depot are worth considering.

Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.