Leggett & Platt Offers 46 Years of Consecutive Dividend Hikes, 3.3% Yield (LEG)
By: Ned Piplovic,
Featured Image Source: Company Website
After four-and a-half decades of consecutive annual dividend hikes, Leggett & Platt, Inc. (NYSE:LEG) — a manufacturer of engineered components and products — rewarded its shareholders with a dividend hike continuation in 2018 and currently offers a 3.3% yield.
In addition to the long series of consecutive annual dividend hikes, the company has also provided its shareholders with robust asset appreciation over the past several years. Despite a dip during early 2018, the share price has fully recovered since its 52-week low in May. The recent rise drove the share price’s 50-day Moving Average (MA) above the 200-day MA in a bullish manner, indicating that the share price could sustain its uptrend a little longer. The current share price is still below analysts’ $51 average target price, which means that the share price could have room to advance at least another 10% over the next few periods.
Investors convinced that the share price could continue its uptrend should act quickly as the September 21, 2018, ex-dividend date approaches quickly. The company’s pay date will occur on October 15, 2018.
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.
As a result of the most recent of the company’s dividend hikes, the current $0.38 quarterly dividend amount is 5.6% higher than the $0.36 quarterly payout from the same period last year. This new quarterly distribution is equivalent to a $1.52 annualized payout and currently yields 3.3%, which is 10% above the company’s own 3.0% dividend yield over the past five years. In addition to exceeding its own five-year average, Leggett & Platt’s current 3.3% yield outperforms the 2.01% average yield of the entire Consumer Goods sector by nearly 65%, as well as the simple average of all the companies in the Home Furnishings & Fixtures industry segment by 68%. Furthermore, the company’s current yield is also almost 50% higher than the 2.21% average yield of the Home Furnishings & Fixtures segment’s dividend-paying companies.
The company started paying dividend distributions in 1938 and has offered its shareholders annual dividend hikes for the past 46 years. Just over the past 20 annual dividend hikes, the company raised its total annual dividend payout more than 330%. This pace of annual dividend hikes corresponds to an average annual growth rate of 7.6% per year over the past two decades.
Following a brief rise at the onset of the trailing 12 months the company’s share price peaked on October 27, 2017, at $49.45. Immediately after peaking at the end of October 2017, the share price dropped more than 18% towards its 52-week low of $40.38 on May 1, 2018. However, after the May Day low, the share price recovered most of those losses and closed on September 17, 2018, at $46.01. This closing price was marginally above the share price level from one year earlier, nearly 14% higher than its 52-week low from May 2018 and 52% higher than it was five years ago.
The combined benefit of share price growth and rising dividend payouts provided the company’s shareholders with a one-year total return on their investment of 5.2%. The total return over the past three years followed a similar annual growth rate and rose 15.5% over the three-year period. However, robust share price growth during 2014 and the first half of 2015 contributed to a total return of more than 73.1% over the past five years.
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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.