Motley Fool: Whirlpool’s steady rebound opens door to future earnings

The name “Whirlpool” might suggest something headed down the drain, but the Whirlpool company is far from that.

Whirlpool struggled for years following the Great Recession, with U.S. home sales down and Europe facing financial crises. The end result was fewer people buying big appliances for their homes.

Fast-forward to today for a far different scenario. The U.S. housing market is in good (if not great) shape, and consumers face near-record-low lending rates to buy new appliances, including washers and dryers. In Europe, we’ve seen the housing market stabilize, which has reduced pressure on Whirlpool’s overseas results.

Look ahead, and things really get exciting. A mixture of acquisitions – acquisitions have always been a core component of Whirlpool’s strategy – and rebounding European and U.S. housing markets are expected to drive Whirlpool’s earnings significantly higher through 2018.

Whirlpool is keeping its expenses under control, and it plans to continue to reward those who stick around for the long term. Since early 2011 it has increased its dividend payout three times, and it recently yielded 1.6 percent. Its forward-looking price-to-earnings (P/E) ratio is 11, well below its five-year average of 15.

With brands that include Maytag, KitchenAid, Jenn-Air and Amana, Whirlpool is a household name, an appliance juggernaut, and an attractively priced growth stock to consider for your portfolio.

Q: Is it better to start receiving Social Security benefits early, on time or late? – A.K., Butler, Pennsylvania

A: It all depends on you and your circumstances. Collecting early means your monthly payments will be smaller, but you’ll receive payments for more months. (A payment beginning at age 62 instead of age 67, which is the “full” or “normal” retirement age for those born in 1960 or later, is much smaller, but you’ll get 60 extra payments.)

If you have any reason to believe you won’t live a long time, starting early can be best, but it can also make sense for other folks. After all, money you receive early can be invested, or can permit you to leave other investments in place longer. Also, some people have little choice; they simply need the income before retirement age.

There’s a significant upside to delaying your benefit, though: For every year that you delay it up to age 70, the value of your payout rises about 8 percent. That’s not a small sum, and it can add up considerably over a few years. Given that many of us will live a very long time, waiting can be worth it.

My smartest investment

Back in the mid-1980s, when I started investing, I was very impressed by a small company, The Home Depot. I was a customer and also an investor, as it soon became one of my core stock holdings.

Back then I was using an expensive full-service brokerage, and when the Gulf War arrived, I was urged to sell all my stocks, as a stock market implosion was expected. I did, and nothing happened. I was livid, as it caused me to owe taxes on my gains and to lose money.

I bought back my Home Depot stock and changed brokerages. The new one also encouraged me to sell some of it and to diversify more. I never did, and now I’m a millionaire! – R.P., Arizona

The Fool responds: You’re smart to trust yourself. The stock market will indeed crash now and then (though no one knows exactly when), but it has always recovered. Thus, it’s a good place for long-term money.

Diversification is important, though. It’s risky if any single holding makes up a big chunk of your portfolio. Home Depot has increased some 500-fold since the mid-1980s.