Whirlpool’s 9% Yield Is a Back-Up-The-Truck and Buy Opportunity

Key Points

• Whirlpool's stock price has sunk to a historically low valuation, offering investors a substantial 9% yield.
• The market may fall further, but the fact that rock bottom is in sight will likely produce a rebound. 
• The company is refocusing on positioning itself for the U.S. housing recovery. It is tariff-resistant, manufacturing 80% of what it sells in the U.S. domestically. 

Whirlpool NYSE: WHR faces challenges and headwinds like any business in 2025, including the impacts of tariffs and trade relations. However, its high-quality operations have improved over the past year, further improvements are expected, and its 9% yield is reliable. The company’s efforts include a refocus on domestic growth that meant divesting European operations and reducing exposure in India to raise capital, pay down debt, and increase free cash flow.

As for the U.S. operation and its exposure to tariffs, Whirlpool manufactures about 80% of the items sold in the U.S. domestically, so the exposure is limited. 

Whirlpool’s Dividend Is Reliable in 2025

The takeaway for investors is that the market has priced in the worst of the worst-case scenario in 2025, leaving the stock and its reliable dividend at a historically low valuation and high yield, making it a back-up-the-truck-and-load-up quality buying opportunity. 

High yields like the 9% offered by Whirlpool in Q2 can be a red flag, but not in this case. The yield is relative to the stock price decline, which is significant, but the bottom of the sell-off is in sight. Regarding the distribution yield and its safety, the company’s payout ratio is high at 70% in 2025 but is expected to fall in the coming years as annual earnings growth resumes. 

As it is, the company will report a business contraction in 2025 due to its divestitures, but it is growing organically and sustaining sufficient cash flow to continue with its plans. Balance sheet highlights at the end of F2024 reflect the divestitures, as well as debt reduction and value building, resulting in a 13% annual increase in shareholder equity and a reduction in leverage. The long-term debt-to-equity ratio fell to 1.77X, leaving the company in a fortress condition.

Investors shouldn’t expect a distribution increase or significant share repurchases until the macroeconomic situation stabilizes and the U.S. housing recovery gets underway.

Sell-Side Supports Sets Whirlpool Stock Up to Spin Higher

The analysts' coverage of WHR is tepid at best, with only four analysts issuing ratings since April 2024. They rate the stock as Reduce but see it advancing by 35% at their consensus price target. The price target is firm, with 75% of the targets above it, and the most recently issued one is at the high end of the range, representing another 30% of upside. Institutional and short-selling activity is more significant. 

Short-sellers are responsible for Whirlpool’s 2025 price decline and the value opportunity presented in April. Their interest is down from the peaks set in 2022 and 2023, but still high at nearly 12% and sufficient to weigh the market down in the absence of aggressive buyers. However, the institutions have been buying the stock as it moves lower, netting more than $165 million in shares in Q1 and the first half of Q2.

They own more than 90% of the stock and provide a solid support base for the market. The combination of institutional buying and short-selling has the manufacturing stock set up to rebound strongly, given a catalyst, and it may come with the FQ1 earnings release. 

Whirlpool Retreats to Rock Bottom

The price action in WHR stock is bearish in early Q2, but the bottom is in sight. The bottom is near $72.50, which coincides with the low end of the analysts' range and the COVID-19-induced bottom set in 2020. The market will likely rebound from this level and may do so strongly. However, with the housing market still under pressure, it is possible that WHR stock will enter a trading range and move sideways until the recovery begins.

That isn’t likely until interest rates come down, and that isn’t likely until later in the year.