Dividend Aristocrats In Focus Part 21: Leggett & Platt

Leggett & Platt (LEG) has one of the longest company histories among the Dividend Aristocrats. It has been in business since 1883, when J.P. Leggett, an inventor, created a bedspring that was superior to the existing products at that time.

J.P. Leggett’s invention was so revolutionary that it launched not just his own company, but an entire industry as well. Today, Leggett & Platt has 17 business units, 20,000 employees, and 130 manufacturing facilities across 19 countries.

Leggett & Platt is one of only 50 Dividend Aristocrat (see the full list here). It has increased its dividend for 45 years in a row.

Keep reading this article to learn more about the investment prospects of Leggett & Platt.

Business Overview

Any company that has been in business for more than 130 years will encounter many changes through the decades, and Leggett & Platt is no exception. It has diversified into a much broader set of products.

For example, in 1960, bedding components represented nearly 100% of its sales. Bedding components and products are still its single largest source of revenue, but the Bedding Group segment comprises less than 25% of total sales.

Leggett & Platt operates in four main segments:

Residential Furnishings (51% of annual sales)

Specialized Products (26% of annual sales)

Commercial Products (15% of annual sales)

Industrial Materials (8% of annual sales)

Growth Prospects

Over the past 10 years, Leggett & Platt grew earnings-per-share by ~4% compounded annually. Its steady growth is impressive, given it struggled during the Great Recession of 2008-2009. Leggett & Platt has benefited from the economic recovery in the U.S. and the strength of the housing market.

Last year was a particularly good year for the company. Leggett & Platt’s earnings-per-share (adjusted for divestitures and one-time financial items) increased 31% from 2014.

Through the first three quarters of this year, total sales dropped 4% versus the same nine-month period last year. However, this was mostly due to divestitures. Earnings-per-share increased 19% through the first three quarters of 2016. The company benefited from lower raw materials costs, as the price of steel has dropped this year.