At a glance
Watsco Inc is worth $12.00B, about 24 times its fiscal 2025 earnings. Revenue fell 5.0% to $7.24B in fiscal 2025, with 6.9% kept as profit; over 5 years it has grown 7.4% a year. It pays a 4.44% dividend yield, raised every year for at least 9 years, and returned $1.91B to shareholders in dividends and buybacks over FY2021–FY2025. The stock returned −15.9% over the past year with dividends reinvested and +3.3% a year over five years, against +11.5% and +11.7% for the S&P 500. At its worst it fell 24.3% in the 2020 crash (S&P 500: 33.7%) and 26.1% in the 2022 bear market (S&P 500: 24.5%), and was back at its earlier high 3 months and 2 months after the lows.
The business in plain English
Watsco is the largest distributor of air conditioning, heating and refrigeration equipment (HVAC/R for short) in North America. It does not make the equipment. It buys systems from manufacturers, chiefly Carrier and Rheem, and resells them to more than 130,000 contractors who install and repair them in homes and businesses. It also sells the parts and supplies those jobs need, such as ductwork, insulation, thermostats and tools. It also sells commercial refrigeration gear like compressors, walk-in coolers and ice machines.
Watsco profits from the markup between what it pays suppliers and what contractors pay it. In 2025 that gross margin was 28% of $7.2 billion in revenue, and about 10% was left as operating profit. Its main focus is the replacement market, where aging systems, which last roughly 8 to 20 years, need swapping out quickly. As of December 31, 2025, it ran 695 locations in 43 US states, Canada, Mexico and Puerto Rico. It also serves contractors working on new homes and commercial buildings.
The United States produced 90.6% of 2025 revenue, Latin America and the Caribbean 4.8% and Canada 4.7%. Watsco has grown by buying regional distributors, 72 since 1989, and then adding branches and products. It usually keeps their local names and managers. Revenue has climbed from $64.1 million in 1989 to $7.2 billion in 2025.
Price history
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WSO -15.9% over the year to Oct 28, 2026, total return with dividends reinvested.
How it makes money
By geography
| US | $6.56B | 90.6% |
| Latin America And Caribbean | $344.3M | 4.8% |
| CA | $338.1M | 4.7% |
Latest results
- In Q2 FY2026 (ended Jun 30, 2026), revenue was $2.10B, up 2.1% from a year earlier, and net income was $163.3M (-11.0%).
- For fiscal 2025, revenue was $7.24B (-5.0% year over year; +7.4% a year from FY2020 to FY2025) with a 6.9% net margin.
Financial health check
| Revenue growth a year (FY2020–FY2025) | +7.4% good |
|---|---|
| Operating margin | 10% watch |
| Free cash flow margin | 7.4% watch |
| Return on equity (FY2025) | 17.9% good |
| Return on assets (FY2025) | 11.3% good |
| Net cash (cash minus debt) | $-22.0M watch |
| Fiscal year | Revenue | Net income | Free cash flow |
|---|---|---|---|
| FY2020 | $5.05B | $269.6M | $517.9M |
| FY2021 | $6.28B | $418.9M | $324.1M |
| FY2022 | $7.27B | $601.2M | $536.3M |
| FY2023 | $7.28B | $536.3M | $526.5M |
| FY2024 | $7.62B | $536.3M | $743.0M |
| FY2025 | $7.24B | $497.0M | $535.1M |
Valuation snapshot
| Market value | $12.00B |
|---|---|
| P/E ratio | 23.7 |
| Dividend yield | 4.44% |
Rank among 1514 US companies
Price behavior
| YTD | 1 yr | 3 yr | 5 yr | 10 yr | |
|---|---|---|---|---|---|
| WSO price data to Oct 28, 2026 | -10.6% | -15.9% | -2.7% | +3.3% | +11.3% |
Show as a table
| Year | Price data |
|---|---|
| 2026 (to date) | -10.6% |
| 2025 | -27.0% |
| 2024 | +13.2% |
| 2023 | +77.0% |
| 2022 | -17.7% |
| 2021 | +42.1% |
| 2020 | +30.5% |
| 2019 | +35.0% |
| 2018 | -15.5% |
| 2017 | +18.4% |
| 2016 | +30.0% |
| 2015 | +12.0% |
| 2014 | +13.8% |
| 2013 | +30.0% |
| 2012 | +26.6% |
| 2011 | +7.8% |
| 2010 | +33.5% |
| 2009 | +33.3% |
| 2008 | +8.9% |
| 2007 | -19.9% |
| 2006 | -19.8% |
| 2008 financial crisis stocks fell Oct 9, 2007 – Mar 9, 2009 | Lost 26% over that stretch · deepest drop along the way 47.1%, back to its old high 9.9 months after the low |
|---|---|
| 2020 COVID crash stocks fell Feb 19, 2020 – Mar 23, 2020 | Lost 18.6% over that stretch · deepest drop along the way 24.3%, back to its old high 2.6 months after the low |
| 2022 bear market stocks fell Jan 3, 2022 – Oct 12, 2022 | Lost 11.5% over that stretch · deepest drop along the way 26.1%, back to its old high 1.8 months after the low |
Insider activity
Form 4 filings from 2025-10-29 to 2026-10-29 (10 read): 0 open-market purchases and 0 sales ($0.00).
Who owns it
Large shareholders (13G filings)
| Capital International Investors | 10.1% | Mar 31, 2026 |
| FMR LLC | 5.6% | Dec 31, 2025 |
| Capital Research Global Investors | 5.4% | Mar 31, 2026 |
| Vanguard Capital Management | 5.22% | Mar 31, 2026 |
| Vanguard Portfolio Management | 5.02% | Mar 31, 2026 |
ETFs with the most weight in WSO
| TMFG Motley Fool Global Opportunities ETF | 4.41% |
| ABLD Abacus FCF Real Assets Leaders ETF | 4.15% |
| SMIG Bahl & Gaynor Small/Mid Cap Income Growth ETF | 4.01% |
| PRN Invesco Dorsey Wright Industrials Momentum ETF | 3.67% |
| TMFM Motley Fool Mid-Cap Growth ETF | 3.23% |
| NBSM Neuberger Berman Small-Mid Cap ETF | 2.76% |
| DDIV First Trust Dorsey Wright Momentum & Dividend ETF | 2.57% |
| MBOX Freedom Day Dividend ETF | 2.19% |
What could go wrong
- Heavy reliance on Carrier. Carrier supplied 62% of Watsco's purchases in 2025, and its top ten suppliers together supplied 85%. A supply disruption, a broken relationship or weaker demand for Carrier products could hurt sales, profits and cash flow.
- Tariffs on Mexican and Chinese supply chains. Carrier, Rheem and other makers source parts from China and Mexico and assemble many home and light-commercial systems in Mexico. Higher tariffs could raise Watsco's costs and force price increases that may drive away customers.
- Shifts in refrigerants and efficiency rules. Watsco depends on suppliers making products that meet environmental and efficiency rules. If new systems using lower-GWP refrigerants (gases with less global-warming impact) don't catch on with buyers, sales could suffer.
- Acquisitions can go wrong. Watsco grows by buying distributors. Deals can bring hidden liabilities, integration problems, lost customers or key staff, extra debt, or new shares that shrink existing owners' stake.
- Competition, including manufacturers' own branches. Watsco competes with national and local distributors and with equipment makers that run their own distribution in some markets. Competition on price, product availability and service could push down prices and margins.
Recent events
- Major agreement signed; Major agreement ended; New debt or financial obligation
- Quarterly results released; Investor presentation or announcement
- Unregistered sale of shares
- Quarterly results released; Investor presentation or announcement
- Shareholder vote results
- Unregistered sale of shares
- Quarterly results released; Investor presentation or announcement
- Quarterly results released; Investor presentation or announcement
- Quarterly results released; Investor presentation or announcement
For income and retirement investors
Watsco's regular dividend has risen for at least nine straight years through 2025, and the true streak may be longer. Dividends per share grew from $6.93 in 2020 to $11.70 in 2025, about 11.1% a year, and the yield was 4.44% as of October 28, 2026. The catch is a thin cushion. In 2025, dividends used 95.3% of earnings and 88.5% of free cash flow (cash left after running and investing in the business), while profit fell 7.3%. Watsco bought back no shares from 2021 to 2025.
The shares have fallen hard in past downturns but recovered fairly quickly. They dropped 47.1% in the 2008 financial crisis and recovered in about 10 months. Falls of 24.3% in the 2020 COVID crash and 26.1% in the 2022 bear market were made up within three months. Recoveries aren't guaranteed: the stock lost 27% in 2025 and another 10.6% in 2026 through October 28. A single stock carries more risk than a diversified fund.
Questions investors ask
How does Watsco make money?
Watsco makes money by distributing heating, air conditioning and refrigeration equipment, plus parts and supplies, to more than 130,000 contractors. It buys from manufacturers such as Carrier and Rheem and resells at a markup. In 2025 its gross margin (the share of sales kept after paying suppliers) was 28% on $7.2 billion of revenue, and net profit was $497 million. It focuses on the replacement market, where contractors need equipment and parts quickly. It ran 695 locations as of December 31, 2025.
Does Watsco raise its dividend every year?
Yes, for at least nine straight years through 2025, and the true streak may be longer. Watsco's regular dividend per share grew from $6.93 in 2020 to $11.70 in 2025, about 11.1% a year, with no special one-off payments in that span. Past increases don't guarantee future ones. Net income fell 7.3% in 2025, and dividends already take up nearly all of earnings.
What is Watsco's dividend yield and payout ratio?
The dividend yield (a year's dividends as a share of the stock price) was 4.44% as of October 28, 2026. In 2025, Watsco paid $11.70 per share in dividends against diluted earnings of $12.25 per share. Total dividends paid equaled 95.3% of net income and 88.5% of free cash flow (cash left after running and investing in the business). It made no share buybacks from 2021 to 2025 and returned about $1.9 billion through dividends instead.
How much does Watsco depend on Carrier?
Heavily. Carrier accounted for 62% of Watsco's purchases in 2025, through brands including Carrier, Bryant, Payne, Tempstar, Heil and Comfortmaker. Rheem was next at 8%, and the top ten suppliers together made up 85%. Watsco holds exclusive rights to distribute Carrier, Rheem and Mitsubishi products in certain territories, under agreements with no stated end date. The company warns that losing a key supplier could disrupt some of its businesses.
How has Watsco stock performed?
Weakly over the past year or two, but better over a decade. Based on the share price as of October 28, 2026, the stock was down 15.9% over one year and down 10.6% for 2026 up to that date, after a 27% fall in 2025. Over five years it gained 3.3% a year. Over ten years it gained 11.3% a year, or 193% in total. Its deepest drop in the three years to that date was 48.3%.