My Top Dividend Stock To Buy In August
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Lately, it seems like we've been in the midst of a rotation in the market, with the month of July seeing capital shift out of semiconductor and AI-related stocks and into more defensive sectors like health care and real estate.
As a result, in my portfolio, stocks like AbbVie (ABBV), Kilroy Realty (KRC), and Realty Income (O) have all been on fire. There were plenty of other dividend stocks out there that shot up quite a bit as well.
Still, there are quite a few laggards out there, with one of the most interesting being Lowe's (LOW), which is my top dividend stock to buy in August.
Source: Fiscal AI
In the past month, shares of LOW are down about 1.2%, leaving the stock down close to 13% so far in 2026. From what I can see, the main reason really comes back to the housing market.
Right now, the housing market is basically stuck. Mortgage rates are still relatively high, and for the millions of homeowners who locked in 3% mortgages a few years ago, the last thing they want to do is sell their house and finance another one at today's rates.
Source: FRED
Economists sometimes call this the "lock-in effect." And when people aren't moving, they also aren't taking on as many of those big renovation projects that tend to come with buying or selling a home.
On top of that, the bulk of Lowe's business comes from DIY customers. And because inflation is still running hot and people are tightening their budgets, a lot of consumers have been putting off larger, more discretionary home improvement projects.
In fact, Marvin Ellison, who is the CEO of Lowe's, recently said this has been "the most difficult housing market" that he has faced in this business since the financial crisis.
Fortunately, this isn't really a Lowe's-specific problem. It's been affecting the entire home improvement industry. If you look at Home Depot's (HD) share price over the past year, it’s actually down more than Lowe’s.
Source: Fiscal AI
Now, having said all of that, why would you want to buy Lowe's today...with all these different headwinds facing it?
Well, in my opinion, every issue we just talked about is cyclical rather than permanent.
Eventually, people are going to start moving again. And when they do, they'll want to update their kitchens, replace their flooring, remodel their bathrooms, and tackle all those home improvement projects they've been putting off over the last few years.
After all, at the end of the day, homes don't stop needing maintenance just because interest rates are high.
Meanwhile, Lowe's is still the same high-quality business it's been for decades. Along with Home Depot, it has one of the strongest brands in the home improvement industry, it still generates billions of dollars in free cash flow every year, and this is certainly not the first difficult housing cycle the company has been through.
And in the meantime, one of the best parts about owning a company like Lowe's is that you're getting paid to wait. The dividend is still very safe, and it's still growing, just like it has for more than 60 consecutive years.
Source: Fiscal AI
Personally speaking, I have a small LOW position in my portfolio, and I would not at all mind adding more at current prices.
It's been multiple years since I've picked up any shares, and with the current price back down near my average cost, now seems like a good time to give LOW a little bit of love.
With that said, LOW isn't the only attractive buying opportunity out there right now. There are plenty of other stocks out there that look interesting, and I'd love to hear from you: Which discounted stocks do you have your eye on as we make our way into August?
Write to me here and let me know.
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"I struggle to find the right balance between investing my extra money and spending it on things I enjoy. What's your advice?"
- Seth | YouTube
If it's any consolation, this is something I struggle with quite a bit as well. I think most investors do, to some degree.
Part of the reason is that, once you understand the power of compounding, you stop thinking about a dollar as just being a dollar. Instead, you think about what that dollar could become if you invested it and let it grow over time.
That naturally makes it harder to spend your money because every potential purchase feels like you're giving up hundreds or even thousands of dollars in future wealth.
I also think a lot of investors struggle with this because investing itself becomes the thing they enjoy spending money on. While most people would rather have a root canal than set aside money for their future, for many of us, investing is a hobby.
We get excited about buying another cash-flowing asset in the same way someone else gets excited about buying a new Apple Watch or a new pair of shoes.
Ultimately, I think that's a good problem to have. Forgoing frivolous purchases and investing that money instead is what allows you to achieve financial freedom in the first place. It also keeps you grounded and makes it much less likely that you'll overspend on things that don't really matter.
At the same time, I think it's important to enjoy your money outside of your portfolio.
If there's something you genuinely want and it fits within your budget, then sometimes you just have to force yourself to buy it. In my experience, that's really the only way to overcome the guilt of not investing that money.
At the end of the day, you have to remember that we only have one shot at this life, and there's more to it than building the largest portfolio possible. As long as your investments are taken care of and you're still living within your means, I think anything is fair game.
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