Dividend Aristocrat Overview: Leggett & Platt, Inc.

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About Leggett & Platt

Leggett & Platt manufactures bedding and furniture components and finished products. The company, which dates back to 1883, has 19,000 employees and 130 manufacturing facilities in 18 countries. Leggett & Platt’s business is divided into four segments:

  1. Residential Furnishings, which supplies components that are used in finished bedding, furniture and carpet products. The customers for these products include finished bedding and upholstered furniture manufacturers.
  2. Commercial Fixturing & Components, which manufactures custom-designed retail store fixtures and point-of-purchase displays, standard shelving for retailers and grocery stores, private label finished furniture, and components for office chairs. Customers include retail chains, individual stores and commercial furniture manufacturers.
  3. Industrial Materials, which produces nearly 500,000 tons of steel rods annually, along with steel wire used in bedding coils and other furniture products along with nickel tubing for the aerospace industry. About 50% of the wire output and 15 – 20% of the steel tubing output is used by other Leggett & Platt divisions. Other customers include automotive seating manufacturers, aerospace suppliers and equipment manufacturers, and waste recyclers and waste removal businesses.
  4. Specialized Products, which develops various niche products such as automotive seat support and lumbar systems, racks and shelving for van interiors, and machinery for wire shaping, industrial sewing and quilting mattress covers. Customers for these products include automobile seating manufacturers, bedding manufacturers, and telecommunication, cable and delivery companies.

In 2013, Leggett & Platt had net sales of $3.75 billion – up about 1% from 2012 – and net earnings of $197.3 million – down 20.5% from 2012. The company states that its objective is to pay out 50 – 60% of earnings as dividends. However, for 2011, 2012 and 2013 the dividend payout ratio (dividends declared per share/earnings per share) was 106%, 67% and 88%, respectively. Leggett & Platt management stated in the 2013 Annual Report, “As our markets recover, we expect to move into our target payout range.”

The company is a member of the S&P 500 index and trades under the ticker symbol LEG.

Leggett & Platt’s Dividend and Stock Split History

Leggett & Platt Dividend Growth

Leggett & Platt has increased dividends since 1972. Recent dividend increases have been very small.

Leggett & Platt first began increasing dividends in 1972 and has increased them in 51 of the last 52 years. The company met the Dividend Aristocrat criteria of 25 consecutive years of increasing regular dividend payments in 1996. Since 2005, Leggett & Platt has increased its dividend in the 3rd quarter of the calendar year, with the stock going ex-dividend in the middle of September. Leggett & Platt’s declared its most recent dividend increase in August 2014 when the company increased the quarterly dividend by 3.33% from 30 cents to 31 cents per share. I expect Leggett & Platt to announce its next dividend increase in August 2015.

Leggett & Platt had established an outstanding dividend growth record from 1971 through 2008, roughly doubling the dividend payout each 5 years. Since then, Leggett & Platt has only increased the quarterly dividend by a penny a share each year from 2009 – 2014 after completely skipping the dividend increase in 2008. (Despite skipping the dividend increase in 2008, because the total dividend payment in 2008 was greater than that in 2007 and was increased again in 2009, Leggett & Platt maintained its record of annual dividend increases as far as S&P is concerned. I explained how this works in a prior blog post as Ecolab has done the same thing.) Leggett & Platt has a 5-year compounded annual dividend growth rate (CADGR) of 3.65%. Longer term the dividend growth rate improves with a 10-year CADGR of 7.72%, a 20-year CADGR of 10.87%, and a 25-year CADGR of 10.84%.

Since meeting the Dividend Aristocrat criteria of 25 consecutive years of dividend growth in 1996, Leggett & Platt has split its stock once – a 2-for-1 split in June 1998. Prior to that, Leggett & Platt split its stock 2-for-1 in September 1995 and June 1992, 3-for-2 in March 1986, 2-for-1 in August 1983, 3-for-2 in September 1978 and January 1973, and 5-for-3 in May 1969. You would now have 90 shares of Leggett & Platt for each share purchased at the beginning of 1969.

Your investment in Leggett & Platt from mid-2009 to mid-2014 would have grown from about $11.24 to about $33.31 – a compounded rate of 24.3% over that time, not including the effects of reinvested dividends. This significantly beat the 14.3% return of the S&P 500 over that same period.

Leggett & Platt’s Direct Purchase and Dividend Reinvestment Plans

Leggett & Platt does not have a direct purchase or dividend reinvestment plan. If you’re interested in investing in Leggett & Platt stock, you can do so through any broker. You can also automatically reinvest dividends through most brokers. Contact your broker directly for more information.

Helpful Links

Leggett & Platt’s Investor Relations Website

Current quote and financial summary for Leggett & Platt (finviz.com)

Want to find out about more great dividend growth stocks?

Check out the list of current S&P Dividend Aristocrats.

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