Pool Corporation investors have had a rough stretch in recent years. The stock is down 63% from its all-time high and has fallen nearly 40% over the past year.
That’s a painful slide for a company that Warren Buffett‘s Berkshire Hathaway believed in enough to accumulate an 8.3% stake worth approximately $647 million.
However, the ongoing drawdown in Pool Corp. (POOL) allows you to buy the dip and benefit from a 2.5% dividend yield.
Let’s dive deeper.
What does Pool Corp. do?
Pool Corporation is the world’s largest wholesale distributor of swimming pool supplies and equipment.
It also sells irrigation and landscape products, including chemicals, pumps, filters, heaters, and decking materials.
The company serves pool builders, service businesses, specialty retailers, and commercial pool operators across the U.S. and internationally.
It operates456 sales centers and also runs the Pinch A Penny franchise network, which just surpassed 300 locations.
Valued at a market cap of $7.76 billion, POOL stock has returned 183% to shareholders in dividend-adjusted gains over the past decade.
A focus on dividend growth
POOL has raised its annual dividend from $1.24 per share in 2016 to $5 in 2026, according to data from Fiscal.ai.
The company’s annual dividend expense is roughly $185 million, while it is forecast to end 2026 with a free cash flow of $389.75 million, indicating a payout ratio of less than 50%.
In 2025, Pool Corp. returned $530 million to shareholders, including $341 million in buybacks.
Company CEO Peter Arvan offered more detail.
Pool Corp.’s key dividend metrics:
- Annual dividend: $5 per share
- Dividend yield: Around 2.4% at current prices
- 10-year dividend growth rate: Approximately 17% annually
- Payout ratio: Roughly 48%, leaving room for continued growth
- Cash returned to shareholders in 2025: $530 million
That dividend track record is hard to ignore. Pool Corp. has consistently grown its payout across economic cycles.
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Why the Warren Buffett dividend stock is down
New pool construction has collapsed from pandemic-era highs. In 2025, roughly 60,000 new pools were built in the U.S. That’s down about 40% from 2022 and approximately half the peak seen during the Covid-era boom.
That matters because new construction drives a big chunk of discretionary spending — the kind that flows through Pool Corp.’s equipment and building materials categories.
Related: Warren Buffett successor Abel sends first Berkshire Hathaway letter to shareholders
In Q4 of 2025, Pool Corp. reported revenue of $982 million, below estimates of $999 million, per Reuters. Adjusted earnings per share of $0.84 also missed consensus estimates of $0.97.
Moreover, Pool Corp.’s full-year 2026 earnings guidance of $10.85 to $11.15 per share fell short of the $11.62 Wall Street had expected, Reuters reported.
Notably, Pool Corp.’s vendors raised prices in response to President Donald Trump’s tariff policies, which pushed the company to raise its own prices.
Inventory climbed 13% to $1.5 billion by year-end, as management bought ahead of cost increases.
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Despite the headline pressure, Pool Corp.’s maintenance business held up well.
CEO Peter Arvan noted that roughly 64% of pool product sales in 2025 came from maintenance items, such as chemicals, replacement parts, and service supplies.
That business doesn’t disappear when new pool construction slows.
Gross margin improved slightly, reaching 29.7% for the full year and 30.1% in Q4, up 70 basis points year over year. That’s a sign of disciplined pricing and solid supply chain management, even in a tough market.
Can POOL stock recover in 2026?
Management’s tone on the earnings call was cautiously optimistic. Arvan said dealer sentiment heading into the 2026 season was “more encouraging than not,” with many builders expecting to match or exceed last year’s pool counts.
- Texas showed signs of recovery late in 2025.
- Florida, despite headwinds from insurance and housing costs, posted positive results on a two-year stack.
- Europe posted its first local-currency growth in three years.
- Digital sales hit a record 15% of total revenue for the full year, up from prior levels.
- The company’s POOL360 platform is gaining traction, and management believes technology investments will begin generating more meaningful returns in 2026.
Still, risks remain for POOL stock investors.
- Consumer confidence has not meaningfully recovered.
- Discretionary spending on renovations and new builds is still weak.
- And the tariff environment adds cost pressure that is difficult to pass through fully.
What is the POOL stock price target?
POOL stock reported a free cash flow of $309.5 million in 2025, down almost 50% year over year.
Wall Street now estimates FCF to improve to $454 million in 2028. If the dividend stock is priced at 25x forward FCF (similar to its five-year average), it could return 50% over the next two years.
Out of nine analysts covering Pool stock, five recommend “buy” and two recommend “hold.” The average POOL stock price target is $272, indicating an upside potential of 29% from current levels.
The bottom line: Pool Corp. is not a broken business. It is a high-quality distributor navigating a cyclical downturn.
With Buffett’s Berkshire holding a significant stake, a growing dividend, and improving operational efficiency, the stock could attract long-term income investors willing to wait for the cycle to turn.
Related: This Warren Buffett favorite just hiked its dividend by 15%
