The Motley Foolยท2025-10-30 09:14Core Insights - The article discusses two dividend-paying value stocks, Home Depot and Nike, which are currently underperforming despite the broader market rally, presenting potential investment opportunities for passive income generation [2][18]. Home Depot - Home Depot has faced challenges in recent years, with stock prices and earnings stagnating despite benefiting from a surge in DIY projects during the pandemic [4]. - The company is heavily reliant on the housing market, which is currently affected by high mortgage rates and low existing home sales, leading to delays in home purchases and improvement projects [6]. - Home Depot is proactively expanding its store footprint and has made a significant acquisition of SRS Distribution for $18.25 billion, focusing on contractor sales, particularly roofing products [7]. - Compared to its competitor Lowe's, Home Depot has a larger store footprint and customer base, making it a more attractive option for long-term investors [8]. - The company offers a dividend yield of 2.4%, making it a viable choice for investors looking to capitalize on a future recovery in the housing market [9]. Nike - Nike has transitioned from a high-growth stock to a value stock, with a dividend yield of 2.3% after a 46% decline in stock price over the past five years [11]. - The company faces significant challenges due to a slowdown in consumer spending, particularly in discretionary items, as households are impacted by a higher cost of living [12]. - Competition from newer brands like Hoka and On Holdings has intensified, although these competitors are also experiencing difficulties [13]. - Nike's revenue has stagnated, and profit margins are under pressure as the company attempts to cut costs and improve profitability [14]. - Investors are advised to monitor Nike's sales recovery in China and its ability to innovate products while managing costs effectively [16].