Despite the market's sharp downturn, The Home Depot, Inc. (NYSE: HD) continues to garner buy ratings from the financial newsletter community. Following my recent post – Home Depot: Bad News Bottom? – the stock is now the latest featured recommendation from Kelley Wright, editor of Investment Quality Trends.

Kelley, whose strategy is based on assessing a stock's value relative to its historic dividend yield – is very optimistic over Home Depot's recent dividend boost. The company announced a 50% increase in their annual dividend from $.60 to $.90 per share, putting the new dividend yield at around 2.40%. Says Kelley, "This is significantly above HD's historic Undervalued yield of 1.0%, and highlights the firm's spectacular dividend growth."

The advisor admits that the yield may appear "paltry" versus other higher-yielding stocks, but he reminds investors to consider the "magic that takes place with a consistently rising dividend trend."

For example, he first added the stock to the IQ Trends portfolio in 2003, at a time when its dividend provided a yield of just 0.8%. Since then, the dividend has risen over 300%.

When combined with the 6% per year annual price appreciation, he notes, his holding in the stock has "delivered an excellent compounded return that has far exceeded the level of inflation."

For those seeking long term growth of capital and income, Kelley concludes, "Home Depot offer excellent current value and upside potential. The stock fits the profile of a bedrock position that every enlightened investor should have in their portfolio."