Home Depot also posted its first yearly revenue increase since 2006, before the recession and housing crash hammered the home-improvement business.
Fourth-quarter net income rose to $587 million, or 36 cents per share, from $342 million, or 20 cents per share last year. Analysts expected 31 cents per share, according to FactSet.
Revenue rose 4 percent to $15.13 billion. Analysts expected $14.81 billion.
Revenue in stores open at least a year rose 3.9 percent globally and 4.8 percent in the U.S. The measure is considered an important gauge of a retailer's financial health because it excludes stores that open or close during the year.
For the year, net income rose 25 percent to $3.34 billion, or $2.01 per share, from $2.66 billion, or $1.57 per share. Revenue rose 2.8 percent to $68 billion.
Home Depot expects revenue to rise 2.5 percent, from a prior forecast of 2 percent to 2.5 percent. That implies revenue of $69.7 billion. Analysts predict revenue of $69.28 billion.
The Atlanta company also raised its quarterly dividend 6 percent to 25 cents, payable March 24 to shareholders of record as of March 10.
Home Depot plans to buy back about $2.5 billion in shares throughout 2011.
Home-improvement retailers are seeing signs of life from shoppers as the housing industry slowly improves and the consumers slowly start to spend normally again after a slowdown during the recession.
Home Depot Inc.'s chief rival, Lowe's Cos., is scheduled to report its results Wednesday.