Home Depot is a major hardware, lumber and home goods store. It operates throughout North America and owns several subsidiaries focused on building supplies and contractor services. This is a profitable company that reported more than $151 billion in sales in 2021, so it’s easy to see how investors would be interested. If you’re looking to buy shares of Home Depot yourself, here’s what you should know. Additionally, you may want to consider working with a financial advisor to help you find the right investments for your overall financial goals.
How To Buy Home Depot Stock in 4 Steps
Home Depot trades under the stock symbol HD on the New York Stock Exchange (NYSE). This is a publicly traded company that issues shares of common stock. That means that Home Depot has no special trading requirements, nor do you have any special rights or restrictions as a shareholder.
To buy shares of Home Depot you would want to follow the same process as with any other publicly traded stock. Specifically, here are the four steps for you to follow:
1. Set Up A Brokerage Account
First, set up an account with a brokerage or trading firm that can trade stocks on the New York Stock Exchange. Any mainstream institution will work, but make sure you choose a solid firm with a good reputation. They will be handling your money after all.
You can set this up either through an online trading platform like E*TRADE, in which case you will conduct all trades yourself or you can open an account with an individual broker, in which case they will conduct the trades for you.
2. Transfer Money to Your Brokerage Account
Once you’ve set up an account you need to fund it. You can’t buy stocks directly from your bank account. Instead, you put money into your portfolio and use that money to buy your stocks. Only transfer in the amount of money you plan on investing. It is rare for brokerages to hold cash in an FDIC-insured bank account, so you want to keep savings in your bank.
3. Buying Shares Directly: Issue A Buy Order For HD Stock
If you want to directly buy shares of Home Depot, you can now issue a buy order for shares of HD stock. You will either do this directly, if you’re using a trading platform or by instructing your broker to buy shares on your behalf. The amount of stock you buy should depend on your finances and trading strategy. Home Depot is a profitable, generally solid big box retailer, but that doesn’t mean they’re bulletproof. They’re exposed to the same forces that affect the retail sector in general.
Additionally, holding any individual stock is a higher-risk, higher-reward strategy. If the company does well, you will collect all the gains, but you have no diversification to mitigate losses. Invest based on how much money you’re comfortable committing to this kind of speculative investment.
4. Buying Diversified Shares: Issue a Buy Order for Funds That Hold HD Stock
If you want to own Home Depot stock, but don’t want the exposure of investing in individual equity, you can buy shares in ETFs and mutual funds that hold HD stock. This will generally include funds that are invested in the retail industry and the construction space. Home Depot is also included in the S&P 500, so any index fund that holds the S&P 500 stocks will own shares of this company.
By investing through a fund you can own a portion of Home Depot stocks while also keeping your investment diversified. The advantage is that you mitigate your risks if Home Depot’s stock does poorly. The disadvantage is that you dilute any potential gains if the stock does particularly well.
Should You Invest In Home Depot?
Before you invest in any individual stock make sure to review the stock, the underlying company and your own portfolio. Factors you should consider include:
- The Stock’s Performance: Determining the stock’s performance and analyzing it is known as “technical analysis.”Look at how Home Depot’s stock price has performed. How well has it done? How much has it grown, and has it outperformed or underperformed the market at large? Is this a volatile stock or a relatively stable one? How well does it track the S&P 500 index at large? Does it generally rise and fall with the market or is it countercyclical? How is the stock priced now compared with its historic value?In the case of Home Depot, this is a high priced stock that has traded for more than $100 per share since 2014. Buying into Home Depot is something of a contradiction. From a technical standpoint, HD trades like a value stock. It has skyrocketed in value over the past 13 years, surging from $25 per share to a 2021 high over more than $400. Its growth has been relatively stable. Home Depot stock tends to track the market at large. It has shown steady (if rapid) growth, recovering particularly quickly during 2020, and only has shared significant losses during the market’s overall downturn in 2022. Bottom line? This combines the performance of a value stock with the fundamentals of a major company, but you’ll pay a lot per share.
- Dividend Payments:Does this stock pay dividends, and on what schedule? If they do make regular dividend payments, what do they tend to pay? How do those payments compare with the stock price and other comparable investments? That is, what kind of dividend payment will $1 worth of Home Depot stock get you compared to $1 of comparable shares elsewhere?Home Depot has issued regular dividends for its entire history as a publicly traded company. At time of writing the company issued quarterly dividends in the amount of $1.90 per share. These payments have increased steadily every year since 1987.
- Company Performance: Home Depot is a major retailer that has generally defied the overall retail industry woes. It has remained consistently profitable, with revenues and profits growing year-over-year most years. Even in years that the company’s growth has declined, it has still posted strong profits and revenue. Although Home Depot is mostly known for its core brand, it has several subsidiaries and has continued making acquisitions in recent years.
- Investor Strategy: Short-term investors may want a more volatile stock that they can flip in the near future, while long-term investors may be interested in the company’s overall steady performance.
The Bottom Line
Home Depot is a North American retailer that specializes in hardware, lumber and home goods. It is a publicly traded company that issues shares of common stock on the New York Stock Exchange. You can invest in it through any mainstream brokerage but the most important thing to do is to make sure it is a good investment that can help you reach your financial goals.
Tips for Investing
- As previously mentioned, it is very important for you to analyze your personal investment goals before moving forward. This involves creating a financial plan that matches your overall goals. A financial advisor can help with this and can recommend the right mix of assets to help you achieve those goals. Finding a financial advisor doesn’t have to be difficult. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’re curious how investing in Home Depot, or other stocks, could impact your overall portfolio, consider using SmartAsset’s free asset allocation calculator.
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