Dividend Aristocrat Leggett & Platt Boosts Quarterly Dividend 5.3% (LEG)
By: Ned Piplovic,
dividend aristocrat, Leggett & Platt, Inc. (NYSE:LEG) — a manufacturer of engineered components and products — extended its current streak of annual dividend hikes to 47 consecutive years by boosting its upcoming quarterly dividend distribution by 5.3%.
As a component of the S&P 500 Index with a market capitalization of more than $3 billion and a streak of annual dividend hikes that is nearly double the 25-year minimum requirement, Leggett & Platt has been designated a Dividend Aristocrat. Furthermore, Leggett & Platt is just three years away from trading its Dividend Aristocrat designation for a Dividend King title. Dividend Kings are companies that, in addition to meeting the S&P 500 membership and market capitalization requirements for the Dividend Aristocrat designation, also have boosted their annual dividend for at least 50 consecutive years.
In addition to the long series of consecutive annual dividend hikes, Leggett & Platt has also provided its shareholders with robust asset appreciation over the past decade. However, the share price has declined and has also experienced a higher level of volatility over the past 12 months. Still, investors who believe that the share price will recover and resume its recent long-term trend, might see this pullback as an opportunity to take a position in this stock at the currently discounted prices.
As of June 2019, more than half of the eight Wall Street analysts currently covering this stock carry a “Buy” (four) or “Strong Buy” (one) recommendation. The remaining three analysts currently recommend a “Hold”. Additionally, the current share price has room on the upside (26%) before it reaches the analysts’ current target price of $45.40. All interested investors should always conduct their own due diligence to make sure that any stock is a good fit for their investment portfolio and long-term investment strategy.
However, investors who see the Leggett & Platt stock as a good pick to realize potential long-term asset appreciation while collecting a steadily rising dividend income, should consider acting quickly. Leggett & Platt will distribute its next round of dividend distributions on July 15, 2019, to all its shareholders of record before the upcoming June 13, 2019, ex-dividend date.
Leggett & Platt, Inc. (NYSE:LEG)
Headquartered in Carthage, Missouri, and founded in 1883, Leggett & Platt designs and produces various engineered components and products through four business segments. The Residential Products segment offers innersprings, wire forms and machines to shape wire into various types of springs, industrial machines, conveyor lines, mattress packaging and glue-drying equipment. Additionally, this segment provides springs and other wire components for manufacturers of finished bedding, upholstered furniture, packaging, filtration, draperies and carpet cushions. The Furniture Products segment offers molded plywood components, private-label finished furniture, beds, bed frames and adjustable beds, as well as steel mechanisms, hardware, springs and seat suspensions. Furthermore, the Industrial Products segment offers drawn wires, bedding and furniture components, automotive seat suspension systems and steel rods. Lastly, the Specialized Products segment offers parts and components for automobile manufacturers, mobile equipment original equipment manufacturers (OEMs) and aerospace suppliers. The products and components in this segment include mechanical and pneumatic lumbar support and massage systems, seat suspension systems, motors, actuators and cables as well as titanium, nickel and stainless-steel tubing, formed tube, tube assemblies and engineered hydraulic cylinders.
Even with a double-digit pullback over the past 12 months and a flat performance in 2019, the share price still tripled since dropping to its 25-year low of slightly above $10 in March 2009. After a brief decline in the first half of 2018, the share price rose by more than 10% between the onset of the trailing 12-month period and its 52-week high of $46.40 on September 14, 2018. Unfortunately, the overall market correction in the last quarter of 2018 pushed down the share price nearly 27% before bottoming out at $33.97 on December 24, 2018.
However, after its 52-week low on Christmas Eve, the share price embarked on a sharp uptrend and rose to $46.07, which was just 0.7% shy of the September high. However, the recovery did not hold, and the share price pulled back again. The pullback was exacerbated by the earnings release, which revealed that despite increased net sales, Leggett & Platt missed earnings expectations by 5.4%.
One of the positive points in the earnings release was that the company’s Residential Products segment — which accounts for more than one-third of total sales — grew 34.7% year-over-year. Leggett & Platt is still confident that it will hit its original guidance targets for full-year 2019. The share price closed on June 3, 2019, at $36.01, which was 14.2% lower than it was last year but 6% higher than the 52-week low at the end of December 2018.
While the share price struggled a bit over the past year, the dividend income was able to continue its strong growth. The upcoming $0.40 quarterly payout marks a 5.3% increase over the $0.38 quarterly payout from the previous period. This new quarterly distribution corresponds to a $1.60 annualized amount and a 4.4% forward dividend yield. This new yield is 43% higher than the company’s own 3.1% average yield over the past five years.
Furthermore, Leggett & Platt’s current yield is nearly 114% higher than the 2.08% simple average yield of the overall Consumer Goods sector. Moreover, its 4.4% yield is the third highest among the 57 companies currently holding the Dividend Aristocrat designation.
Just over the past 20 annual dividend hikes, the company has advanced its annual dividend distribution amount by 344%. This level of advancement is equivalent to a 7.7% average annual growth rate.
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Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.