When Warren Buffett Build a position in a company, Wall Street pays attention. His company, Berkshire Hathaway, doesn’t typically build up an 8.3% stake in a company unless it believes deeply in what that company does and where it’s going.
That’s what made Berkshire’s investment in Swimming pool corporation so notable and the output equally striking.
Berkshire quietly unwound its entire position in Pool (POOL) during the first quarter of 2026.
The stake, which was worth approximately $650 million, no longer exists. And the stock itself tells a painful story: It is almost 70% below its all-time highs.
Why did Warren Buffett invest in Pool shares?
Pool is the world’s largest wholesale distributor of pool supplies, equipment and related products.
Think of it as the middleman between manufacturers and the roughly 120,000 contractors, retailers and service companies that keep America’s backyard pools running.
The business model is based on recurring, non-discretionary spending on pool chemicals, filters and pumps, which are not skipped just because the economy slows.
The business ticked all the boxes for Warren Buffett, given predictable demand, pricing power and a strong network that is difficult to replicate.
Pool Corp also pays a dividend, increasing its appeal to long-term income investors. Down nearly 70% from its all-time highs, POOL stock is currently offering a yield of 2.8%.
New pool construction boomed during the COVID era as Americans poured money into their homes. That surge in demand eventually cooled and construction of new units by pool builders fell sharply.
According to Pool Corp’s earnings call for the first quarter of 2026, new pool units for 2025 totaled 58,000, a fraction of the pandemic-era peak.
Pool posted strong results in the first quarter of 2026
For the first quarter of 2026, the company reported:
President and CEO Peter Arvan highlighted broad-based growth across all product categories.
The chemicals sector grew 8%, driven in part by strong demand for the company’s private brands.
Equipment grew by 7% and construction materials by 5%.
Geographically, California grew 10% and Texas grew 7%, driven by favorable weather and strong maintenance demand.
During the earnings call, Arvan stated:
“We are off to a strong start in 2026, with net sales up 6% and operating income up 7% year over year. Maintenance demand remained resilient and we saw continued, although still gradual, recovery in discretionary categories.”
Management also confirmed full-year diluted earnings per share guidance of $10.87 to $11.17, representing 2-3% growth from the prior year.
Installed base is key to dividend stock
One of the most important things to understand about Pool is where its income originates from.
There are about 5.5 million in-ground pools in the United States that require weekly chemical treatment.
Additionally, pumps and filters wear out and need to be replaced, and equipment is updated. This installed base generates a constant and recurring demand that does not depend on new constructions.
“Our growth thesis does not require a recovery of new units from the pool,” Arvan said during the earnings call, according to a company statement.
The company operates 455 sales centers.
It has a digital ordering platform called POOL360, which now accounts for 13% of net sales, up from 12.5% ​​a year ago.
It also manages the Pinch A Penny franchise network, which added seven new independently owned locations in the first quarter alone.
Pool Corp has been investing in private label chemicals, including its Regal and EZ Clor lines, which have higher margins and have been gaining traction among independent retailers.
Pool Corp. has a solid business modelVictor LOCHON/Getty Images
A growing dividend with a sustainable payout
Pool has increased its annualized dividend from $0.56 per share in 2011 to $5 per share in 2026, indicating a compound annual growth rate of 15.7% over the past 15 years.
The annual dividend expense for the mid-cap stock is around $182 million, while it is projected to report free cash flow of $354 million this year.
Given a payout ratio of 51%, POOL stock has plenty of room to grow its dividend while reinvesting in growth and acquisitions.
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Berkshire’s decision to sell doesn’t necessarily mean Pool Corp is a broken business. The fundamentals, as the first quarter shows, remain intact.
But it does reflect a change of conviction. When a position the size of Berkshire completely exits, it suggests that the expected return no longer meets the standard, at least for now.
For dividend investors still holding POOL, the central question is simpler: Does the installed base thesis hold and can management continue to widen margins while new construction remains weak?
First quarter numbers suggest the answer is yes. Whether that’s enough to regain Buffett’s trust is another question entirely.
Related: Down 63 Percent, Warren Buffett’s Dividend Stock Signals Opportunity
This story was originally published by TheStreet on May 30, 2026, where it first appeared in the Investments section. Add TheStreet as a preferred source by clicking here.
