Leggett & Platt Inc (LEG): This Dividend Aristocrat Has Raised Payments For 42 Straight Years

Compared with its competitors, Leggett & Platt has enjoyed a higher return on equity (15.5% compared with 11.6%) and net margins (6.7% versus 4%). Its forward price-to-earnings ratio of about 20 is in line with competitors, but its 3.5% dividend is more attractive than the industry average of 2.5%.

Risks to consider: Competitive pressures could make it difficult for Leggett & Platt to implement new strategies, and intense regional competition makes it difficult to stand out. The company has done well, but changes in consumer preferences and budgets can change at a moment’s notice. Volatility in raw material prices is also a significant risk that could affect Leggett & Platt’s margins. Finally, a quarter of Leggett & Platt’s sales are made overseas, which exposes the company to currency fluctuations and political and economic risks. Even faced with these risks, however, Leggett & Platt still looks like a solid choice with its strong dividend and track record of steady growth in good and bad economies alike.

Action to take –> Buy Leggett & Platt at up to $35 a share. With a 3.5% dividend, solid strategy and strong growth, the stock could climb to $40 to $45 a share within the next 12 months on the steady demand for home, office and hotel furnishings.

This article was originally written by Jay Peroni, and posted on StreetAuthority.