U.S. Markets open in 7 hrs 46 mins
  • S&P Futures

    4,116.00
    -4.25 (-0.10%)
     
  • Dow Futures

    33,625.00
    -6.00 (-0.02%)
     
  • Nasdaq Futures

    13,782.00
    -26.75 (-0.19%)
     
  • Russell 2000 Futures

    2,224.90
    -5.70 (-0.26%)
     
  • Crude Oil

    59.84
    +0.14 (+0.23%)
     
  • Gold

    1,726.20
    -6.50 (-0.38%)
     
  • Silver

    24.76
    -0.10 (-0.41%)
     
  • EUR/USD

    1.1895
    -0.0023 (-0.1903%)
     
  • 10-Yr Bond

    1.6750
    0.0000 (0.00%)
     
  • Vix

    16.91
    +0.22 (+1.32%)
     
  • GBP/USD

    1.3735
    -0.0007 (-0.0508%)
     
  • USD/JPY

    109.6970
    +0.3210 (+0.2935%)
     
  • BTC-USD

    60,697.00
    +353.40 (+0.59%)
     
  • CMC Crypto 200

    1,296.82
    +2.23 (+0.17%)
     
  • FTSE 100

    6,889.12
    -26.63 (-0.39%)
     
  • Nikkei 225

    29,731.72
    +192.99 (+0.65%)
     

La-Z-Boy Incorporated (NYSE:LZB) Looks Like A Good Stock, And It's Going Ex-Dividend Soon

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Simply Wall St
·4 min read
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

It looks like La-Z-Boy Incorporated (NYSE:LZB) is about to go ex-dividend in the next four days. You can purchase shares before the 1st of December in order to receive the dividend, which the company will pay on the 15th of December.

La-Z-Boy's next dividend payment will be US$0.14 per share, and in the last 12 months, the company paid a total of US$0.56 per share. Based on the last year's worth of payments, La-Z-Boy stock has a trailing yield of around 1.4% on the current share price of $38.69. If you buy this business for its dividend, you should have an idea of whether La-Z-Boy's dividend is reliable and sustainable. As a result, readers should always check whether La-Z-Boy has been able to grow its dividends, or if the dividend might be cut.

Check out our latest analysis for La-Z-Boy

Dividends are typically paid from company earnings. If a company pays more in dividends than it earned in profit, then the dividend could be unsustainable. La-Z-Boy is paying out just 21% of its profit after tax, which is comfortably low and leaves plenty of breathing room in the case of adverse events. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. It paid out 6.0% of its free cash flow as dividends last year, which is conservatively low.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

historic-dividend
historic-dividend

Have Earnings And Dividends Been Growing?

Businesses with strong growth prospects usually make the best dividend payers, because it's easier to grow dividends when earnings per share are improving. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. This is why it's a relief to see La-Z-Boy earnings per share are up 5.1% per annum over the last five years. Earnings per share have been growing at a decent rate, and the company is retaining more than three-quarters of its earnings in the business. This is an attractive combination, because when profits are reinvested effectively, growth can compound, with corresponding benefits for earnings and dividends in the future.

Many investors will assess a company's dividend performance by evaluating how much the dividend payments have changed over time. La-Z-Boy has delivered 17% dividend growth per year on average over the past eight years. It's encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Final Takeaway

Has La-Z-Boy got what it takes to maintain its dividend payments? Earnings per share growth has been growing somewhat, and La-Z-Boy is paying out less than half its earnings and cash flow as dividends. This is interesting for a few reasons, as it suggests management may be reinvesting heavily in the business, but it also provides room to increase the dividend in time. We would prefer to see earnings growing faster, but the best dividend stocks over the long term typically combine significant earnings per share growth with a low payout ratio, and La-Z-Boy is halfway there. Overall we think this is an attractive combination and worthy of further research.

While it's tempting to invest in La-Z-Boy for the dividends alone, you should always be mindful of the risks involved. Our analysis shows 2 warning signs for La-Z-Boy and you should be aware of them before buying any shares.

We wouldn't recommend just buying the first dividend stock you see, though. Here's a list of interesting dividend stocks with a greater than 2% yield and an upcoming dividend.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.