My Top Dividend-Paying Deep Value Stock to Buy in September

Key Points

• A combination of a weak housing market due to relatively high interest rates and Asian competitors loading products into the market ahead of tariff actions is pressuring near-term trading.

• The headwinds of Asian rivals' intensifying competition could turn into tailwinds as these rivals sell down U.S. inventory and tariffs start to bite into their competitive positioning.

• The U.S. company's significant manufacturing footprint in the U.S. means it's ideally placed to win out under the Trump administration.

• 10 stocks we like better than Whirlpool ›

Whirlpool (NYSE: WHR) stock is fraught with near-term risk and may not suit most investors, but if you are looking for a classic "deep value" investment opportunity and an excellent dividend, then it may be a suitable fit.

A classic deep value stock

Trading on just over 13.1 times management's estimate for free cash flow (FCF) in 2025, and just 14.5 times Wall Street estimates for earnings in 2025, dropping to 11.4 times earnings in 2026, Whirlpool looks like a good value. Throw in an annualized dividend yield of 3.8% and the stock seems an excellent value.

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However, as ever, when something looks too good to be true, there's usually a catch. In this case, the ongoing challenges of a relatively high-interest rate environment are negatively impacting the housing market and demand for higher-margin major domestic appliances. In addition, Whirlpool faces considerable competition from Asian competitors that are pre-loading the market ahead of the implementation of tariffs, creating an intense promotional environment.

Unfortunately, those conditions forced management to slash its full-year earnings guidance (from ongoing operations) to $6 to $8 from $10 previously, and its FCF to $400 million from $500 million to $600 million previously.

Don't be surprised if management does so again on the next earnings call, as the end-market environment hasn't improved significantly, potentially creating an intense competitive climate as Asian competitors sell the inventory they previously loaded into the market.

30 Year Mortgage Rate data by YCharts

Why Whirlpool can recover

While the near-term outlook is challenging, an interest rate cut will benefit its overall end market. A simple reason why Asian competitors are entering the market is that they anticipate the tariffs will negatively impact their competitive position in the U.S. in the future.

Unfortunately, or fortunately, depending on how you view the tariff actions, the trade conflict is dynamic and evolving as the U.S. administration conducts ongoing negotiations. For example, any pause in tariff implementations could lead to more pre-loading.

That said, if Whirlpool can navigate this challenging period, its competitive position (80% of its major domestic appliance sales in the U.S. are produced in the U.S. and utilize U.S. steel) is likely to improve significantly going into 2026.

Image source: Getty Images.

Management outlined the kind of tariffs its Asian competitors could face during its second-quarter earnings call, citing the total tariff as of Aug. 1. They are significant, ranging from up to 61% on imports from China to 25% on imports from Vietnam, with Korea, Cambodia, and Vietnam in the middle.

While its competitors do have manufacturing presence in the U.S. (25% of its competitors' U.S. sales are produced in the U.S.), it's nowhere near Whirlpool's 80% figure for U.S. major domestic appliances.

In addition, just as its competitors can increase their manufacturing footprint in the U.S. to navigate tariffs on imports, so Whirlpool can do the same if it sees a volume improvement in the future.

Image source: Getty Images.

A stock to buy

It's incredibly difficult for Whirlpool's management to call a bottom to the intense promotional environment, so it's definitely not going to be easy for investors to do so either. In other words, it could worsen before it improves for the company. Still, it's a safe bet that the tariff actions will result in a strengthening of Whirlpool's competitive position in its key North America end market.

Cautious investors may want to wait and see how events unfold in the third quarter, but those deep-value investors who don't mind some near-term risk may find Whirlpool an excellent buy at this time. Throw in the possibility of a Federal Reserve interest rate cut in September, and its overall end market and competitive positioning could start to look a lot better in 2026.

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Lee Samaha has no position in any of the stocks mentioned. The Motley Fool recommends Whirlpool. The Motley Fool has a disclosure policy.