5 Best Dividend Stocks to Invest In According to Hedge Funds

3. The Home Depot, Inc. (NYSE:HD) 

Number of Hedge Fund Holders: 98

Dividend Yield as of May 21: 2.97% 

The Home Depot, Inc. (NYSE:HD) is the largest home improvement specialty retailer in the world, engaging in the sale of building materials and home improvement products. The company operates over 2,300 retail stores in all 50 states, the District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, Canada, and Mexico.

On May 20, Morgan Stanley trimmed its price target on The Home Depot, Inc. (NYSE:HD) from $420 to $400, while maintaining an ‘Overweight’ rating on the shares. The revised target, which still indicates an upside potential of over 27% from the current levels, comes after the firm “slightly’ reduced its EPS estimates for FY26 and FY27 following the recent Q1 results, in addition to reiterating its guidance for the ongoing year.

Similarly, on the same day, Wells Fargo lowered its price target on The Home Depot, Inc. (NYSE:HD) from $375 to $360, but kept its ‘Overweight’ rating on the shares. According to the analyst, HD’s recent Q1 report was mostly in line, “albeit April weather dampened the exit rate.” Wells believes that Home Depot’s management offered reason for optimism by reaffirming the company’s FY 2026 guidance, despite the current macroeconomic concerns regarding interest rates, oil prices, etc.

The move comes despite The Home Depot, Inc. (NYSE:HD) beating estimates in its Q1 report on May 19. The company reaffirmed its guidance of total sales growth of approximately 2.5% to 4.5% for FY 2026. Meanwhile, its adjusted EPS growth is expected to range from flat to up 4% from the $14.69 delivered last year.