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Whirlpool (WHR) Announces a Dividend Hike, Cheers Investors

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Whirlpool Corporation (WHR - Free Report) is cheering investors by enhancing shareholder returns at a time when most companies’ dividends and share repurchases remain suspended due to the hardships posed by the coronavirus outbreak. The company announced the eighth successive hike in dividend. It will now pay out a dividend of $1.25 per share, suggesting a 4.2% rise from the prior rate of $1.20. The increased dividend will be paid out on Dec 15 to shareholders of record as of Nov 20, 2020.

This latest dividend hike brings its annualized dividend to $4.80 per share versus the prior rate of $4.75. Notably, the company has a five-year annualized dividend growth rate of 6.1%. Based on its share price of $199.93 on Oct 20, Whirlpool currently has a dividend yield of 2.4%. Moreover, the company’s current dividend payout ratio is 34.7%.

Dividend payouts are the biggest enticement for investors and Whirlpool is committed to boosting shareholders’ wealth. Notably, it is a windows-and-orphan stock, with a long history of regular reliable dividends. In 2019, the company paid out $300 million of dividends to shareholders. Apart from these, the company recorded a free cash flow of $912 million in fiscal 2019, up 7% from the prior year.

Stock Soars in 3 Months

Whirlpool remains poised to gain from the recent spike in demand for home and kitchen products, increased focus on e-commerce to take advantage of customers’ online shopping habits and cost-containment efforts. We note that shares of the company have advanced 39% in the past three months compared with the industry’s growth of 38.2%.

The stock has also comfortably outperformed the Consumer Discretionary sector and the S&P 500 index, which have gained 6.8% and 5.5%, respectively, in the past three months. Further, the stock is hovering close to its 52-week high of $206.11.

Given these dynamics, we see no reason why Whirlpool, with a long-term earnings growth rate of 16.7%, cannot outperform the 52-week-high mark in the near term.

Sound Fundamentals

Whirlpool has been witnessing solid recovery in demand across all regions. In fact, robust demand for the home and kitchen products, including cleaning equipment, kitchen essentials and air purifiers, has been aiding the top and bottom lines of Whirlpool. Topping it, strong market demand for its HEPA Air Purifier, which is capable of removing as much as 99.97% of particles from the air, remains a key growth driver. Apart from these, thee-commerce business is performing well, driven by better omni-channel capabilities.

Encouragingly, management favorably revised its sales view for 2020. It now envisions a 2020 sales drop of roughly 10-15% compared with the earlier projection of a 13-18% decline. Meanwhile, organic sales are likely to drop 7-12% as compared to the prior view of a decline of 10-15%.

Further, it is on track with its cost-reduction initiatives. Moreover, the company targets more than $500 million of net cost takeout from actions, such as curtailing structural and discretionary costs, capturing raw material deflation opportunity, effectively managing working capital, and syncing supply chain and labor levels with demand.

Summing Up

All said, this Zacks Rank #2 (Buy) company’s impressive fundamentals and strong footing in the industry along with a solid portfolio make it a favored stock. It further draws investors’ attention through its regular dividend payouts and commitment to enhance shareholder returns.

3 More Stocks to Consider

Electrolux AB (ELUXY - Free Report) has an impressive long-term earnings growth rate of 7.9% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Kroger Co. (KR - Free Report) has an impressive long-term earnings growth rate of 6.2% and a Zacks Rank #2.

Crocs’ (CROX - Free Report) bottom line beat estimates by 191.8%, on average, over the trailing four quarters. It also carries a Zacks Rank #2.

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