Stock Analysis

Lifetime Brands (NASDAQ:LCUT) Has Announced A Dividend Of $0.0425

  •  Updated
NasdaqGS:LCUT
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Lifetime Brands, Inc.'s (NASDAQ:LCUT) investors are due to receive a payment of $0.0425 per share on 15th of November. This payment means the dividend yield will be 2.1%, which is below the average for the industry.

Check out the opportunities and risks within the US Consumer Durables industry.

Lifetime Brands' Payment Has Solid Earnings Coverage

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. Based on the last payment, Lifetime Brands' earnings were much higher than the dividend, but it wasn't converting those earnings into cash flow. In general, we consider cash flow to be more important than earnings, so we would be cautious about relying on the sustainability of this dividend.

Over the next year, EPS is forecast to expand by 59.3%. 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:LCUT Historic Dividend October 27th 2022

Lifetime Brands Has A Solid Track Record

The company has an extended history of paying stable dividends. The annual payment during the last 10 years was $0.10 in 2012, and the most recent fiscal year payment was $0.17. This means that it has been growing its distributions at 5.4% per annum over that time. Dividends have grown at a reasonable rate over this period, and without any major cuts in the payment over time, we think this is an attractive combination as it provides a nice boost to shareholder returns.

The Dividend Has Limited Growth Potential

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Let's not jump to conclusions as things might not be as good as they appear on the surface. Lifetime Brands' earnings per share has shrunk at 20% a year over the past five years. Such rapid declines definitely have the potential to constrain dividend payments if the trend continues into the future. On the bright side, earnings are predicted to gain some ground over the next year, but until this turns into a pattern we wouldn't be feeling too comfortable.

In Summary

Overall, we don't think this company makes a great dividend stock, even though the dividend wasn't cut this year. While the low payout ratio is redeeming feature, this is offset by the minimal cash to cover the payments. We would probably look elsewhere for an income investment.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Still, investors need to consider a host of other factors, apart from dividend payments, when analysing a company. Case in point: We've spotted 4 warning signs for Lifetime Brands (of which 1 makes us a bit uncomfortable!) you should know about. Looking for more high-yielding dividend ideas? Try our collection of strong dividend payers.

What are the risks and opportunities for Lifetime Brands?

Lifetime Brands, Inc. designs, sources, and sells branded kitchenware, tableware, and other products for use in the home in the United States and internationally.

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Rewards

  • Trading at 59.9% below our estimate of its fair value

  • Earnings are forecast to grow 124.14% per year

Risks

No risks detected for LCUT from our risks checks.

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