Editor’s Note: Pool Corp.’s 21 dividend raises in 22 years is the income math our colleague Robert Rapier has built an entire research franchise around. Utility Forecaster covers essential-service companies where that compounding runs for decades — 15 of the 40 current holdings have already paid back their entire purchase price in dividends. See the Dividend Map →

Broiling. Stifling. Sweltering.

Pick your favorite adjective. It’s hot out there. Most of the central U.S. has been stuck under a stationary high-pressure ridge (aka heat dome) that has kept conditions sunny, humid and generally miserable… with heat indexes well into triple-digit territory.

In other words, the perfect conditions for a cooling swim. When the mercury soars, there’s no better time for a backyard oasis. Unfortunately, the weather forecast isn’t the only (or even the biggest) factor for those who are contemplating a swimming pool.

These projects are typically financed, so interest rates and borrowing costs play a large role. Right now, they are proving to be a hindrance. Whatever the reason, fewer pools are being dug. Homeowners installed about 60,000 new in-ground pools last year, a steep drop-off from the 120,000+ pace from 2020 through 2022.

Of course, the pandemic lockdowns had a little something to do with that record boom. So today’s normalized environment looks soft by comparison. But even before Covid, construction rates routinely hit 80,000 per year. So much like the housing market itself, pool groundbreaking “starts” have cooled.

Still, there’s plenty of demand out there for Pool Corp. (NSDQ: POOL), the nation’s largest wholesale pool distributor. Through a vast global network of service centers, the company feeds more than 100,000 customers with 200,000 different outdoor products.

That includes everything from pool essentials (like chlorine and pump filters) to landscaping materials and outdoor patio furniture. All told, the business rakes in approximately $5.3 billion in annual revenues.

Sales have been sluggish, rising a tepid 2% last quarter. Earnings grew a bit faster, climbing 4%, despite the impact of higher freight costs. For the full year, management is expecting profits to range on either side of $11 per share. That’s a marked decline from the $13+ it hauled in just a few years ago, but a slight improvement from last year’s take.

Construction crews aren’t as overbooked these days. Fortunately, new construction only accounts for a 15% sliver of Pool’s revenues. Renovations and remodeling projects account for 20%, while the bulk of sales (about two-thirds) are tied to maintenance and repairs.

As any pool owner can tell you, digging a new pool may be a discretionary purchase, but maintaining an old one isn’t — unless you want a murky, algae-filled bog in your backyard. The class of 2026 may be smaller than 2025 or 2024, but every new unit adds to the overall installed base.

According to the Pool and Hot Tub Alliance, there are now 10.7 million residential and public pools in the United States — one for every 30 people nationwide. And just about all of them require filters, vacuums, chemicals, and other consumable products to stay sparkling clear.

Through its network of sales centers, Pool Corp. supplies specialty retail stores, professional maintenance shops, service contractors, and other such customers. And since these buyers have their own clients who prefer clean pools, most product lines see steady recurring orders.

So even when the backhoes aren’t quite as busy, Pool still generates healthy cash flows. And with a clean balance sheet (and relatively light capital expenditures), it has the luxury of returning heaps of cash to stockholders. By heaps, I mean $180 million over the past two quarters via dividends and stock buybacks.

Keep in mind, this mid-cap business only has a market cap of $6 billion. The price tag has been cut in half over the past 12 months. Still, over that same span, the company has doubled its share repurchase program to $600 million, while upping the quarterly dividend to $1.30 per share.

Pool Corp. has now raised dividends 21 times in the past 22 years. Payouts have risen by 60% over the past five years alone.

Don’t let the ugly stock chart fool you. This isn’t a business in disarray, simply one returning to normal after the stock spiked above $500 during the lockdowns. It remains highly profitable, even in downcycles. But negative sentiment has temporarily driven shares of this entrenched industry leader to a new 52-week low.

Research groups are projecting stable 4% to 5% annual growth in this market over the next few years as more homeowners spruce up their outdoor living spaces – to say nothing of new apartment and hotel swimming amenities and other commercial projects. Internationally, the European market is seeing robust double-digit growth.

This long-term tailwind has helped POOL stock deliver a market-crushing 29% annualized return from its IPO in 1995 through 2025. Warren Buffett himself took a large position (3.5 million shares) for Berkshire Hathaway (NYSE: BRK-B), although the stake was sold after his retirement.

Either way, at prices below $200, the water is fine.

The dividend discipline Nathan describes above — a company raising its payout year after year while the cost basis never moves — is exactly what our colleague Robert Rapier looks for in essential-service stocks at Utility Forecaster. Utilities, water operators, and infrastructure businesses with captive customers and regulated margins are where that compounding tends to run longest. The publication has covered this sector since 1989 and today holds positions entered in that year, in 1994, and in 2000, still paying, still raising. In 15 of the current 40 holdings, the cumulative dividends already exceed what was originally invested. He’s mapped every one of them. See the Dividend Map →