As I monitor call activity, I look for stocks that I already own.  Stocks that pay a good and increasing dividend.  Stocks that have a good history of EPS and Revenue growth.

Leggett and Platt, symbol LEG, is one of those stocks.  Let's first look at the recent fundamentals.

Source:  Nasdaq.com

You can see clear evidence of revenue growth, EPS (earnings per share) growth, and dividend growth.   And in the next table you will see call option potential.

I have a significant position in LEG but I added today and am selling calls against that new position.  I picked a strike price that nudges up to the 52 week high of just over $55.00.   If they take it, I still have my original position.  If they don't take it, I get to pocket both the dividend and the call premium.

That is my strategy to retire with income that grows; and I am sticking with it.

M* MoneyMadam
Disclosure:  Long LEG with calls on part of the position

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LEG for yield

I still like LEG.

https://seekingalpha.com/news/3487621-leggett-and-platt-declares-0_40-dividend#email_link

M* MoneyMadam

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Leggett and Platt a Dividend Machine for 2019

How often does one stock go down or up based on news from a stock in the same industry.  Sleep number stock is under pressure (you can read the article here https://seekingalpha.com/news/3451714-sleep-number-shares-sink-q1-sales-margin-disappoint?app=1#email_link   I was hoping Leggett and Platt would go down in sympathy.  Here is why.

• LEG meets all Dividend Machine Fundamentals
• Dividend yield is greater than 2 year U.S. Treasury
• Dividend growth beats inflation
• History suggests the dividend is safe in difficult times
• Valuation is acceptable

Leggett and Platt is a very diversified company that supplies among many other items, bedding.  I was hoping Leggett and Platt, symbol LEG, might have a similar down turn as Sleep Number, symbol SNBR, down $7 or 15% as of this writing.  But LEG is holding up.

I like Leggett and Platt, symbol LEG; three portfolios hold LEG, 2011, 2013 and 2014.  Click on the year to read the original post.  It's not an exciting stock.  Not a stock with a lot of call option excitement.   But as you can see with the history in this blog that it is a steady source of income for we income investors.  If I were constructing another income portfolio, I would add LEG to it.


FUNDAMENTALS




LEG meets most of the hurdles I use to pick an income stock.  It pays a dividend that is much bigger than I can get from a 2 year U.S. Treasury.   To take the risk embedded in any stock, you have to beat the safest investment such as a U.S. Treasury note or bond.  LEG has earnings that far exceed the dividend paid out making that dividend more safe.  Dividend increases, and D/E (debt to equity ratio) are all within the range I look for (http://www.themoneymadam.com/p/dividend-stock-criteria.html.)


DIVIDEND MACHINE

To be a "Dividend Machine" a stock has to have a history of increasing the dividend over time.  LEG fits that bill.   Inflation, not the CPI number or the one used by the "Fed" but the inflation I measure, is about 3.8%.  I would like to see my income go up by 3.8%.  I can stomach ups and downs in the value of the investment if it is basically safe and continues to raise my pay.   You can see in the table under FUNDAMENTALS,  the last three year dividend increases have averaged over 6%.  Take a look at the longer term dividend history and you can see even during the very difficult period of 2008/2009, LEG delivered safe and increasing income.

From Leggett and Platt Website

 VALUE INVESTMENT

Leggett and Platt Historical P/E Ratio from Macro Trends.net

LEG is trading well above my basis of $28 and change.  Today LEG is trading at $43.35.  Is that too expensive?  Looking at the historical P/E of LEG, I think it is not too expensive.  LEG's current P/E (price earnings ratio) is right around 19 while not cheap this is a very reasonable valuation particularly when you look at the P/E history

While, the vast diversification of this company may be a good thing or a bad thing, I can only go on past performance and the data available. One of part of LEG management I like is the stated goal of increasing total share holder value through, growth as well as returning money to shareholders through dividends and stock buybacks.  For an income investor, those are very nice goals.

April options expire today and I will have some money to invest.  I am going to add LEG and hope the bed bugs don't bite.

M* MoneyMadam

Disclosure:  Long LEG

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Dividends & Income Dividend Machine for 2014 - LEG Leggett & Platt

Another dividend machine for 2014. 

I have owned this stock for a while and now I think it should be a 2014 Dividend Machine.  Leggett & Platt makes all kinds of things for homes, offices, airplanes … they’re everywhere.   As you know I do not use current trends like housing starts to determine which stocks to buy.  I use my four Dividend Machine criteria and by golly LEG qualifies.

I noticed it today as I was looking through my portfolio for covered calls.    I found a nice call on LEG and I checked the Dividend Machine Fundamentals of LEG to make sure I still wanted to own it.  LEG's Dividend Machine Fundamentals are presented below.

Leggett & Platt (LEG) Dividend Machine Fundamentals

Today, as I write, LEG is trading about $32.50 which is the price I will use for my analysis.    Over the past 8 quarters, LEG consistently earned more than it paid out in dividends.   EPS = $1.34 and Dividends = $1.20.   LEG’s dividend yield is 3.68%. 

Dividend increases are very important to income investors and LEG makes the grade with an average dividend increase of 4% over the past five years.  LEG has been solidly managed and sports a debt to equity (D/E) ratio of .625.

See the table below for a summary of LEG’s Dividend Machine Fundamentals. 

Covered Call on LEG

The table below summarizes the income potential for investors who buy LEG at $32.50 and sell a June $35 call.   This kind of additional income is why I own LEG as one of my Dividend Machines.

Consider LEG for the income producing portion of your investment portfolio.

TheMoneyMadam

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2011 Dividend Machine and CAPITAL PRESERVATION

2011 Dividend Machine – Capital Preservation

            Do income investors have to sacrifice capital preservation for income?  I will answer this question by looking at our fifty two, 2011 Dividend Machine companies in terms of their stock price. 

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Dividend Machine Leggett & Platt May 30, 2011

                As an income investor you want to sleep well at night.  Income investors should consider owning the company that invented the steel coil bedspring.  Leggett and Platt, symbol LEG, invented the steel coil bedspring and has evolved into a creator and manufacturer of specialty metal products. LEG has operations in 20 different countries. 

LEG will pay a dividend of $.27 on July 15, 2011 provided you own it by June, 13.2011.   At the closing price of $25.59 on Friday, LEG’s dividend yield is 4.22%.
 

Earnings per share are $1.16 with a recent income growth rate of greater than 50 percent.  Debt to equity (D/E) ratio for LEG is a very respectable. 57.  Review this company and see if it fits into the income-producing portion of your portfolio.  LEG is a reliable dividend machine; it provides diversification; and, you will sleep at night.

Very Truly Yours,

TheMoneyMadam

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