LEG - Leggett & Platt: Dividend Lessons Learned From A Former King

2024-06-04 12:38:15 ET

Summary

• Leggett & Platt, Incorporated has cut its dividends after 51 consecutive years of dividend hikes.
• A key lesson I learned for analyzing dividend stocks is to not just look at the yields and simple payout ratios. Instead, analyze the company’s financials more holistically.
• Looking ahead, I am seeing strong EPS headwinds, inventory issues, and stretched balance sheet.
• As such, despite the beaten-down prices and valuation discounts, I would recommend against bottom-fishing attempts.

LEG stock: the dividend king cut its dividends

Leggett & Platt, Inc. ( LEG ) caught my attention in early 2022 during my routine screening of dividend stocks. In these screens, I specifically look for stocks that pay regular dividends and are yielding either far above or below their historical average yield. LEG was yielding around 5% at that time as seen in the next chart, close to the highest level in at least 10 years (except for the period of fire sale during the breakout of COVID-19). Leggett was a dividend king that had hiked its dividend payouts for 51 consecutive years (at that time)....

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