My Top Dividend Stock To Buy In April
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I’m not much of a baseball guy, but there’s no other way to say it: The market in March has been sliding harder than Trea Turner. Stocks across the board continue to take hit after hit, and at this point, there’s really no sign that the volatility is going to slow down anytime soon.
With that said, as gut-wrenching as all of this red is starting to become, it’s creating a lot of opportunity—especially for dividend investors like us. One stock that’s looking especially interesting to me right now is Pool Corporation (POOL)—my top dividend pick for April, and also one of the more recent additions to Warren Buffett’s portfolio.
In case you’re not familiar with this company, Pool Corporation is the world’s largest wholesale distributor of swimming pool supplies, equipment, and other outdoor-related products. They’ve got about 440 sales centers around the world, which gives them a pretty wide footprint.
Source: Investor Presentation
One of the things that I like most about this company is the fact that over 80% of their sales come from recurring maintenance and replacement products—things like pool chemicals, filters, and pumps. These are the kinds of things that pool owners have to buy again and again, year after year.
To me, that kind of repeatable revenue is exactly what I want to see in a company since it makes their sales and free cash flow much more predictable.
However, despite being what I’d consider a very high-quality business, POOL’s share price hasn’t exactly looked like it lately. Over the past month, the stock is down almost 7%, almost 4% year-to-date, and nearly 21% in the past year.
Fortunately, at least from what I can see, the drop doesn’t seem to have much to do with the company’s actual performance. It’s more so happening as a result of the craziness and uncertainty we’re seeing in the economy and the world right now, which is putting pressure on a lot of great businesses.
The S&P 500 itself is down about 4% this year, and with persistent tariff headlines and geopolitical noise, it’s not hard to see why things are so fragile. During times like this—when fear drives the market—fundamentals tend to get forgotten, and that’s where great buying opportunities can arise.
Source: Snapstock
As we can see, Pool Corporation has historically been a pretty consistent grower. From 2020 to 2022, the business had an especially strong tailwind thanks to the pandemic.
During this period, people were spending more time at home and investing in home improvements—which, for many, meant building a pool and upgrading their outdoor living spaces.
As a result, new pool construction surged, and with that came an increase in demand for all the ongoing maintenance those new pools required, which clearly showed up in Pool Corporation’s numbers.
More recently, it seems like things have normalized a bit, which makes sense. That doesn’t mean the business is struggling though—it just means it’s settling into a new baseline.
Source: Snapstock
Getting into the dividend stats, on the surface, POOL’s 1.5% yield might not seem like anything to get excited about. But when you compare that to its five-year average, it’s actually 50% higher than normal, which is a sign of a great buying opportunity.
And while the yield isn’t anything to write home about, the dividend growth is a different story. Over the past five and ten years, the company has grown its dividend at a compound annual rate close to 20%, which more than makes up for the low starting yield.
Most importantly, the dividend looks to be very well covered. The payout ratios—both on an earnings and free cash flow basis—are low, which means the dividend should be sustainable and has plenty of room to keep growing.
Overall, I think Pool Corporation is a pretty interesting stock to consider right now. It’s a boring and predictable business with consistent demand, strong recurring revenue, and a long runway for continued dividend growth.
I’ve actually had this company on my watchlist for a while now, and if the price keeps heading south—even just another 5% or so—I’d seriously consider starting a position.
With that said, Pool Corporation isn’t the only good buying opportunity on the market right now. It looks like there are quite a handful more, and I want to hear from you: Which discounted stocks do you have your eye on as we head into April? Write to me here and let me know.
And if you want to learn about some other great buying opportunities right now, I've got a few more for you here.
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ICYMI 🎥
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CAREFULLY CURATED 🔍
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"Do you ever get burned out on investing? All the research, day to day?"
- Jordan | YouTube
The short answer, for me, is not usually. But I totally understand how one can get burned out on this stuff.
When you spend a lot of time with your head in the stock market—constantly reading, watching financial news, and analyzing stocks—it’s easy to hit a point where it all starts to feel like too much. In the handful of years I’ve been doing this, I’ve definitely felt that way on more than one occasion.
The flow of information never stops, which is both a blessing and a curse. With an unlimited amount of data at our fingertips, there’s always more to read, more to learn, and more to analyze.
While we're so fortunate to live in a time where that kind of access is incredible, at a certain point, it stops being helpful and starts feeling overwhelming. If I try to keep up with every little thing happening in the market, I will eventually hit a wall.
That’s one of the reasons I love dividend investing—it doesn’t require you to be glued to the market every day. In fact, doing so can often work against you.
The beauty of dividend investing is that it lets you take a step back and focus on the long-term. You don’t need to read every single headline or constantly trade in and out of positions.
When you own businesses that keep generating cash flow and paying dividends regardless of what’s happening in the market, you can afford to take breaks. If the stock market shut down for five years, I know the companies I invest in would keep running—and that’s what I want out of my investments.
At the end of the day, it's important to keep in mind that investing shouldn't be stressful. Your portfolio is there to support your life, not consume it.
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