Consumers are back to improving their homes, and that’s a great sign for the economy going forward. The latest evidence of this positive development comes from home-improvement retailers Home Depot (HD) and Lowe’s (LOW). Over the past two days, the do-it-yourself retail titans each posted better-than-expected fourth-quarter earnings, and each offered the Street positive outlooks going forward. And in a sign of confidence going forward, Home Depot even raised its dividend.

On Monday, Lowe’s (LOW) reported a very healthy 27% surge in Q4 earnings. That was the company’s first year-over-year quarterly increase in seven quarters. Over the three months ended Jan. 29, Lowe’s posted earnings of $205 million, or 14 cents per share, compared with earnings of $162 million, or 11 cents per share, in the same period one year ago. The numbers bested analysts’ estimates calling for earnings per share of 12 cents. Total revenue increased 1.8% to $10.17 billion; however, same-store sales actually fell 1.6%. And though total same-store sales were down, the company did see same-store sales increase in 13 of 23 U.S. regions.

Perhaps the biggest bright spot in the Lowe’s report is the improvement in big-ticket item sales. Sales of items costing at least $500 fell 1% from a year earlier, but that’s vastly improved over the 10% decline in the metric seen in the third quarter. The company also said more customers sought quotes on big home-improvement project costs, and that big-ticket product categories such as kitchen cabinets and appliances posted a double-digit increase in same-store sales. Finally, Lowe’s raised its full-year earnings target to a range of $1.30 to $1.42 from $1.24 to $1.34, and this positive revision includes a potential decline in recent sales due to the cold weather.

On Tuesday, Home Depot (HD) reported better-than-expected fourth-quarter profits citing gains in its international operations and increasing sales in kitchen and bath, paint, flooring and plumbing departments. For the quarter ended Jan. 31, Home Depot earned $342 million, or 24 cents per share on an adjusted basis. That compares quite favorably to a year-earlier loss of $54 million, or 3 cents per share (non-adjusted). Wall Street was anticipating a profit of just 17 cents per share. Home Depot’s total sales fell 0.3%, but the company did see a 1.2% rise in total same-store-sales. Interestingly, that total rise in same-store sales came despite a 1.1% decline in U.S. same-store sales.

Like Lowe’s, Home Depot indicated that its customers have become more willing to purchase big-ticket items. And though its average sales ticket declined 1.7% in Q4, that number represents a marked improvement from the 7.1% decrease in the metric the company saw in third quarter. 

But perhaps the biggest positive for Home Depot going forward was the decision to raise its quarterly dividend by 5% to approximately 23.6 cents per share. Companies don’t increase their dividend unless improved economic conditions are expected going forward, and that’s a very positive sign for the home-improvement sector and for the economy at large.

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