If you are interested in cashing in on La-Z-Boy Incorporated’s (NYSE:LZB) upcoming dividend of US$0.13 per share, you only have 4 days left to buy the shares before its ex-dividend date, 07 December 2018, in time for dividends payable on the 20 December 2018. Investors looking for higher income-generating stocks to add to their portfolio should keep reading, as I examine La-Z-Boy’s latest financial data to analyse its dividend characteristics.
5 questions I ask before picking a dividend stock
Whenever I am looking at a potential dividend stock investment, I always check these five metrics:
- Does it pay an annual yield higher than 75% of dividend payers?
- Has it consistently paid a stable dividend without missing a payment or drastically cutting payout?
- Has dividend per share risen in the past couple of years?
- Does earnings amply cover its dividend payments?
- Based on future earnings growth, will it be able to continue to payout dividend at the current rate?
Does La-Z-Boy pass our checks?
The current trailing twelve-month payout ratio for the stock is 27%, which means that the dividend is covered by earnings. In the near future, analysts are predicting a payout ratio of 26%, leading to a dividend yield of 2.3%. Furthermore, EPS should increase to $2.09.
When thinking about whether a dividend is sustainable, another factor to consider is the cash flow. Cash flow is important because companies with strong cash flow can usually sustain higher payout ratios.
If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. LZB has increased its DPS from $0.080 to $0.48 in the past 10 years. It has also been paying out dividend consistently during this time, as you’d expect for a company increasing its dividend levels. This is an impressive feat, which makes LZB a true dividend rockstar.
In terms of its peers, La-Z-Boy has a yield of 1.6%, which is on the low-side for Consumer Durables stocks.
Keeping in mind the dividend characteristics above, La-Z-Boy is definitely worth considering for investors looking to build a dedicated income portfolio. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. There are three important aspects you should look at:
- Future Outlook: What are well-informed industry analysts predicting for LZB’s future growth? Take a look at our free research report of analyst consensus for LZB’s outlook.
- Valuation: What is LZB worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether LZB is currently mispriced by the market.
- Other Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at email@example.com.