{"id":34157,"date":"2023-07-11T10:32:47","date_gmt":"2023-07-11T14:32:47","guid":{"rendered":"https:\/\/ifintechworld.com\/news\/pool-corp-stock-is-an-impressive-dividend-compounder-nasdaqpool\/"},"modified":"2023-07-11T10:32:50","modified_gmt":"2023-07-11T14:32:50","slug":"pool-corp-stock-is-an-impressive-dividend-compounder-nasdaqpool","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=34157","title":{"rendered":"Pool Corp Stock Is An Impressive Dividend Compounder (NASDAQ:POOL)"},"content":{"rendered":"
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Introduction<\/h2>\n

It’s time to discuss Pool Corporation<\/strong> (NASDAQ:POOL<\/span>), a company I’ve ignored for way too long. While this dividend stock has a yield close to 1%, it has proven to be a terrific compounder, thanks to its large footprint in the (global) pool industry and its ability to generate strong revenue, resulting in a boost to earnings and free cash flow.<\/span><\/p>\n

Right now, POOL shares are trading roughly 35% below their all-time high, as the pandemic caused the stock to fly. Now, the stock has come down as a result of consumer and housing weakness, which is hitting its core business.<\/p>\n

However, this comes with opportunities.<\/p>\n

In this article, we’ll discuss what makes this Louisiana-based corporation so special and why I expect it to remain a long-term dividend wealth compounder.<\/p>\n

So, let’s get to it!<\/p>\n

What Makes POOL So Special<\/span> <\/h2>\n

POOL is a wealth compounder. While its dividend yield is just 1.2%, the stock has been a total return star in the past.<\/p>\n

Despite the 35% sell-off from its all-time high, POOL shares have returned close to 680% over the past ten years, beating the S&P 500 by a huge margin.<\/p>\n

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With a market cap of $15 billion, the company is the world’s largest wholesale distributor of swimming pool supplies, equipment, and related leisure products. It is also a leading distributor of irrigation and landscape products in the United States.<\/p>\n

The company serves roughly 125,000 customers, with no single customer accounting for 10% or more of sales in 2022, as most customers are small, family-owned businesses, including swimming pool remodelers, builders, specialty retailers, repair and service businesses, irrigation contractors, landscape maintenance contractors, and commercial pool operators.<\/p>\n

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Pool Corporation<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Pool Corporation offers over 200,000 products from various manufacturers and their own Pool Corporation-branded products, including maintenance products, repair and replacement parts, building materials, pool equipment, and so much more.<\/p>\n

The company behind the POOL ticker operates 420 sales centers in North America, Europe, and Australia, with the highest concentration of swimming pools in California, Texas, Florida, and Arizona, which makes sense, given the weather conditions in these states.<\/p>\n

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Pool Corporation<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

Furthermore, 96% of its sales are generated in North America. Europe accounted for 4% of 2022 sales. This, too, makes sense, as having a pool is much more common in the US than in Europe.<\/p>\n

With regard to its purchasing strategies, it’s interesting to note that Pool Corporation maintains good relationships with suppliers and participates in early buy programs that offer extended payment terms to qualified customers. The preferred vendor program focuses on stocking products from a smaller number of vendors offering the best terms and service.<\/p>\n

What the company is doing here is textbook purchasing, as it creates good relationships with buyers. As obvious as it may sound, it’s a difficult task to achieve. In its competitive industry, the company is catering to its sellers, not the other way around. Pool Corp. creates a situation where sellers are happy to sell to Pool Corp, which reduces long-term supply risks and gives the company an edge over its competitors, who may not get the preferred buyer benefits of Pool, which may include better pricing and certain services in case of supply bottlenecks.<\/p>\n

Having said that, Pool operates in a cyclical industry. After all, people do not spend money on pool equipment if they are struggling financially.<\/p>\n

However, a large part of the company’s sales are non-discretionary.<\/p>\n

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Pool Corporation<\/p>\n<\/figcaption><\/figure>\n<\/p>\n

As the overview above shows (emphasis added):<\/p>\n