Right now, with consumer discretionary spending under the microscope, many companies are reporting that their customers are more budget-conscious. And that uncertainty has bled into markets, affecting sentiment around stocks that are closely tied to topics most likely to feel the impact of macroeconomic stress — topics like housing and fashion. However, this negative sentiment can create investment opportunities when a stock is hit hard.
Sometimes, of course, the market correctly identifies near-term headwinds. That said, it may also be too pessimistic about the stock price, assuming the headwind will last forever.
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And that brings us to two compelling dividend stock buying opportunities in March. When high-quality businesses fall due to temporary setbacks, patient investors can often step in and secure meaningful dividend yields at a discount. Two companies fit this description today Home Depot(NYSE: HD ) and Nike(NYSE: NKE ).
Both of these established industry leaders have seen their stock prices take a beating over the past 12 months. But their healthy balance sheets and long history of navigating diverse markets make them attractive turnaround candidates for investors willing to think long term.
Image source: Getty Images.
Shares of the home improvement retailer have fallen about 6% over the past 12 months.
Investors have legitimate reasons to be concerned. Sales have been pressured by consumer uncertainty and continued weakness in the broader housing market, weighed down by interest rates that are much higher than they were five years ago.
This dynamic was evident in the company’s fiscal 2025 fourth quarter results. The company’s fourth-quarter sales fell 3.8% year over year to $38.2 billion.
The results, Home Depot CEO Ted Decker said in the company’s fourth-quarter earnings release, “reflect continued consumer uncertainty and stress in the home.”
While this is hard for investors to stomach, they should keep in mind that this is a cyclical headwind, not a broken business model. If interest rates drop materially at some point, the housing market could see a significant catalyst.
At the same time, the company is executing on what it can control, and even announced a dividend increase in the fourth quarter. Additionally, it’s worth noting that Home Depot shares this month will mark the company’s 156th consecutive quarterly dividend gain.
And with a payout ratio (the amount of earnings the company pays out in dividends) of about 65%, Home Depot shares are well supported by earnings.
Investors who buy today are essentially making money waiting for the macroeconomic environment to turn in Home Depot’s favor. And if history is any indication, that will eventually change. How much do they earn? The dividend yield is 2.6%.
Nike stock took an even harder hit, sliding nearly 27% over the past 12 months.
Like Home Depot, the shoe and apparel giant is navigating a difficult, cautious consumer environment. But Nike is also working through its internal turnaround efforts, which has fueled market frustration.
Underscoring the pressure on the business, Nike’s fiscal second-quarter earnings per share fell 32% year over year to $0.53.
But Nike is working hard to stabilize its business. While profitability remains under pressure, the top line is showing signs of improvement. Nike’s fiscal second-quarter revenue rose 1% year over year to $12.4 billion. That’s a big improvement from its 10% sales decline in fiscal 2025.
“NIKE is in the middle of our comeback,” Nike CEO Elliot Hill said in the company’s most recent earnings release. “We are making progress in the areas we have prioritized and are confident in the actions we are taking to drive the long-term growth and profitability of our brands.”
Still, investors shouldn’t underestimate the durability of this brand. Nike’s global appeal remains a powerful structural advantage. If Nike realizes its change, sales will increase rapidly.
A successful operational pivot will likely result in better full-price sales, improved margins, and—perhaps—significant operating profit (income growing faster than sales).
With that said, investors may already be pricing in the early stages of a successful turnaround, given the stock’s price-to-earnings ratio of 33 as of this writing. But if sales growth accelerates and operating profit increases, earnings will rise. Additionally, the company helps offset some of its value risks with a strong dividend yield of around 2.9% at the time of this writing.
When moving into an uncertain market, one of the best filters is to look for established companies with the financial strength to weather the crisis.
Both Home Depot and Nike command strong operating cash flows and have established brands. In addition, this is not the first time that these companies are moving into a difficult economic environment.
Ultimately, I think both stocks are a buy today. But investors should keep positions small given the macroeconomic challenges facing companies. If the macroeconomic environment worsens and their stocks fall further, this may be an opportunity to build a more meaningful position in the two stocks, assuming they can navigate these tough markets with caution.
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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has and offers positions at Home Depot and Nike. Motley Fool has a disclosure policy.
Here are my top 2 stocks to buy in March originally published by The Motley Fool
