Whirlpool Enhances Shareholder Return - Analyst Blog

Whirlpool Corporation WHR, the leading manufacturer and supplier of home appliances, is a promising option for investors seeking both growth and income. The company, yesterday, announced a dividend hike, which reflects its strong cash flow generation capability.

Benton Harbor, MI-based Whirlpool raised its quarterly dividend by 20% to 75 cents from 62.5 cents a share. The increased dividend, which is the 125^th successive quarterly payout, will be paid on Jun 15, 2014, to stockholders of record as of May 16, 2014.

Apart from this, the company's board of directors authorized a new share repurchase program worth $500 million.

Whirlpool is known for its shareholder-friendly moves. Since 1983, the company has increased its dividend from 22.5 cents to 75 cents. The dividend yield based on the new payout and the last closing market price is approximately 2%. We believe that its continuous dividend payments and increments along with regular share buybacks reflect the growth potential of its earnings and cash flow generation capabilities.

Whirlpool's strong balance sheet and cash flows provide it financial flexibility to take shareholder-friendly initiatives, R&D investments and global business expansions. In 2013, the company shelled out $187 million in cash dividends and $350 million toward share buyback.

Cash and cash equivalents stood at $1,380 million at the end of the fiscal while cash from operational activities was $1,262 million as of the same date. We remain encouraged by Whirlpool's strong cash position and its ability to service long-term debts.

We believe that dividend hikes and share repurchases not only enhance shareholder's return but raise the stock's market value as well. Through dividend hikes, companies persuade investors to either buy or hold the scrip instead of selling it. Looking ahead, Whirlpool remains confident of its growth potential, suggesting enhanced value for shareholders through dividend payout.

Apart from Whirlpool, other companies such as Colgate-Palmolive Company CL, Meredith Corporation MDP and Family Dollar Stores Inc. FDO have recently raised the quarterly dividend by 6% to 36 cents, 6.1% to 43.25 cents and 19.2% to 31 cents, respectively.

At present, Whirlpool has a Zacks Rank #4 (Sell).