Stock Analysis

Lincoln Electric Holdings' (NASDAQ:LECO) Dividend Will Be Increased To $0.64

  •  Updated
NasdaqGS:LECO
Source: Shutterstock

Lincoln Electric Holdings, Inc. (NASDAQ:LECO) has announced that it will be increasing its dividend from last year's comparable payment on the 13th of January to $0.64. This makes the dividend yield about the same as the industry average at 1.7%.

View our latest analysis for Lincoln Electric Holdings

Lincoln Electric Holdings' Payment Has Solid Earnings Coverage

While it is always good to see a solid dividend yield, we should also consider whether the payment is feasible. However, Lincoln Electric Holdings' earnings easily cover the dividend. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share is forecast to rise by 22.5% over the next year. Assuming the dividend continues along recent trends, we think the payout ratio could be 27% by next year, which is in a pretty sustainable range.

historic-dividend
NasdaqGS:LECO Historic Dividend December 4th 2022

Lincoln Electric Holdings Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. Since 2012, the annual payment back then was $0.68, compared to the most recent full-year payment of $2.56. This works out to be a compound annual growth rate (CAGR) of approximately 14% a year over that time. Rapidly growing dividends for a long time is a very valuable feature for an income stock.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Lincoln Electric Holdings has seen EPS rising for the last five years, at 12% per annum. With a decent amount of growth and a low payout ratio, we think this bodes well for Lincoln Electric Holdings' prospects of growing its dividend payments in the future.

Lincoln Electric Holdings Looks Like A Great Dividend Stock

Overall, we think this could be an attractive income stock, and it is only getting better by paying a higher dividend this year. Earnings are easily covering distributions, and the company is generating plenty of cash. All of these factors considered, we think this has solid potential as a dividend stock.

Investors generally tend to favour companies with a consistent, stable dividend policy as opposed to those operating an irregular one. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've picked out 1 warning sign for Lincoln Electric Holdings that investors should know about before committing capital to this stock. Is Lincoln Electric Holdings not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

Valuation is complex, but we're helping make it simple.

Find out whether Lincoln Electric Holdings is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis