Wats (WSO) DIvidends Date & History

Key Takeaways

• Watsco (WSO) offers a forward dividend yield of 3.38%, paid quarterly at $3.30 per share, with the next ex-dividend date on April 16, 2026, and payment on April 30, 2026.
• The company has paid dividends for 52 consecutive years and raised its annual dividend 10% to $13.20 per share in 2026, reflecting strong commitment to shareholders.
• 5-year dividend growth rate averages over 11%, positioning WSO as a dividend growth stock in the industrial distribution sector.
• Payout ratio of approximately 96% indicates high earnings commitment, supported by robust cash flows and a conservative balance sheet with low debt (14.86% debt-to-equity).
• Free cash flow (levered TTM: $291 million) and operating cash flow ($570 million TTM) provide coverage, enabling sustained payouts amid HVAC/R market cycles.
• Higher yield than peers like GWW (0.8%), POOL (2.4%), and LII (1.1%), appealing for income-focused investors.

Dividend Overview

Watsco, Inc. (WSO), a leading distributor of air conditioning, heating, and refrigeration equipment, maintains a shareholder-friendly dividend policy emphasizing consistent quarterly payments and growth. The forward annual dividend stands at $13.20 per share, yielding 3.38% based on recent stock prices around $390. This quarterly payout of $3.30 reflects a 10% increase announced in early 2026, marking the 52nd consecutive year of dividends. WSO is classified as a dividend growth stock, with a history of double-digit increases over the past decade, balancing income generation with reinvestment in its distribution network. The policy prioritizes sharing cash flows while preserving a debt-free or low-debt balance sheet for strategic acquisitions and operations in the HVAC/R sector.

Dividend History and Growth

Watsco's dividend history demonstrates remarkable consistency and growth. The company has increased its payout for 13 consecutive years, with a 5-year compound annual growth rate exceeding 11%. In 2026, quarterly dividends rose from $3.00 to $3.30, boosting the annual rate to $13.20 from $11.70 in 2025—a 10% hike. Prior years show steady progression: $11.70 (2025), $10.55 (2024), $9.80 (2023), and $8.55 (2022). This trajectory aligns with Watsco's long-term strategy of distributing excess cash flows from its fragmented HVAC/R distribution market, where it holds a leading position. No cuts have occurred in over five decades, underscoring payment reliability even through economic cycles.

Dividend Sustainability and Payout Ratio

Watsco's dividend sustainability is bolstered by strong cash generation despite a high payout ratio of 95.51%, meaning nearly all earnings (TTM EPS: $12.24) are distributed. This elevated ratio signals limited retained earnings for growth but is mitigated by robust free cash flow coverage. Levered free cash flow (TTM) reached $291 million, while operating cash flow hit $570 million, exceeding dividend obligations. The company's debt-to-equity ratio of 14.86% remains conservative, with $780 million in cash and investments supporting payouts. Record Q4 2025 cash flow of $400 million further affirms resilience. Overall financial stability in the cyclical HVAC/R industry, driven by replacement demand and e-commerce growth, underpins long-term viability.

Dividend Compared to Industry Peers

In the industrial distribution sector, Watsco's 3.38% yield significantly outpaces peers. Industrial distributors like W.W. Grainger (GWW) yield 0.8%, Applied Industrial Technologies (AIT) 0.8%, and WESCO International (WCC) 0.7%. HVAC-related peers such as Pool Corporation (POOL) offer 2.4% and Lennox International (LII) 1.1%. WSO's higher yield, combined with superior growth (11%+ CAGR vs. peers' lower rates), makes it stand out for income seekers, though its payout ratio exceeds industry medians.

AI Screener

Tickeron’s AI Screener is an AI-powered stock and ETF discovery tool that helps traders and investors filter the market based on technical patterns, fundamentals, trends, volatility, and AI-driven signals. Users can scan thousands of stocks and ETFs using customizable filters such as industry, market capitalization, technical indicators, price patterns, and performance metrics. It efficiently identifies dividend stocks, income-focused investments, trending stocks, breakout candidates, and market opportunities more effectively than manual screening. Explore the AI Screener to uncover potential opportunities like high-yield dividend payers in industrials.

Is This Stock Attractive for Dividend Investors?

Watsco (WSO) appeals to dividend growth investors seeking reliable income with upside potential, given its 52-year payment streak, 3.38% yield, and 11%+ historical growth rate. Income-oriented portfolios may value the quarterly payouts and yield premium over peers, supported by cash flow from the essential HVAC/R replacement market. Long-term holders could appreciate the conservative balance sheet and acquisition-driven expansion, which have delivered 17% compounded annual total shareholder returns since 1989. However, the 96% payout ratio introduces caution for conservative investors preferring lower ratios below 60-70%, as earnings volatility in cyclical industrials could pressure coverage. Growth investors might note limited reinvestment, though strong free cash flow ($291 million TTM) and low debt provide a buffer. Balanced dividend strategies favoring industrials with proven resilience may find WSO suitable, particularly amid steady demand for climate-control equipment.

Disclaimer

The information on this webpage is provided for general informational and educational purposes only and is not intended as investment advice, a recommendation to purchase or sell any security, or an offer or solicitation related to investments. It does not consider your personal financial situation, goals, or risk profile, and all investing carries inherent risks, including the possibility of losing your entire investment. For more details, please review our full disclaimer. Disclaimers and Limitations