Unveiling Lincoln Electric Holdings Inc's Dividend Performance and Sustainability
A comprehensive analysis of the firm's dividend history, yield, growth, and payout ratio
Lincoln Electric Holdings Inc(NASDAQ:LECO) recently announced a dividend of $0.64 per share, payable on 2023-10-13, with the ex-dividend date set for 2023-09-28. As investors look forward to this upcoming payment, the spotlight also shines on the company's dividend history, yield, and growth rates. Using the data from GuruFocus, let's deep dive into Lincoln Electric Holdings Inc's dividend performance and assess its sustainability.
Understanding Lincoln Electric Holdings Inc
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Lincoln Electric is a leading manufacturer of welding, cutting, and brazing products. The firm's portfolio of products includes arc-welding solutions, plasma and oxy-fuel cutting systems, and brazing and soldering alloys, as well as automation solutions. Lincoln Electric serves clients in the general fabrication, heavy industries, automotive, construction, shipbuilding, energy and process industries, among other end markets. Based in Cleveland, Ohio, Lincoln Electric has operations in 19 countries and has 11,000 employees worldwide. The company generated roughly $3.8 billion in sales in 2022.
A Glimpse at Lincoln Electric Holdings Inc's Dividend History
Lincoln Electric Holdings Inc has maintained a consistent dividend payment record since 1995. Dividends are currently distributed on a quarterly basis. Lincoln Electric Holdings Inc has increased its dividend each year since 1995. The stock is thus listed as a dividend aristocrat, an honor that is given to companies that have increased their dividend each year for at least the past 28 years.
Breaking Down Lincoln Electric Holdings Inc's Dividend Yield and Growth
As of today, Lincoln Electric Holdings Inc currently has a 12-month trailing dividend yield of 1.40% and a 12-month forward dividend yield of 1.45%. This suggests an expectation of increased dividend payments over the next 12 months.
Over the past three years, Lincoln Electric Holdings Inc's annual dividend growth rate was 6.90%. Extended to a five-year horizon, this rate increased to 9.40% per year. And over the past decade, Lincoln Electric Holdings Inc's annual dividends per share growth rate stands at an impressive 12.40%.
Based on Lincoln Electric Holdings Inc's dividend yield and five-year growth rate, the 5-year yield on cost of Lincoln Electric Holdings Inc stock as of today is approximately 2.19%.
The Sustainability Question: Payout Ratio and Profitability
To assess the sustainability of the dividend, one needs to evaluate the company's payout ratio. The dividend payout ratio provides insights into the portion of earnings the company distributes as dividends. A lower ratio suggests that the company retains a significant part of its earnings, thereby ensuring the availability of funds for future growth and unexpected downturns. As of 2023-06-30, Lincoln Electric Holdings Inc's dividend payout ratio is 0.30.
Lincoln Electric Holdings Inc's profitability rank, offers an understanding of the company's earnings prowess relative to its peers. GuruFocus ranks Lincoln Electric Holdings Inc's profitability 9 out of 10 as of 2023-06-30, suggesting good profitability prospects. The company has reported positive net income for each of year over the past decade, further solidifying its high profitability.
Growth Metrics: The Future Outlook
To ensure the sustainability of dividends, a company must have robust growth metrics. Lincoln Electric Holdings Inc's growth rank of 9 out of 10 suggests that the company's growth trajectory is good relative to its competitors.
Revenue is the lifeblood of any company, and Lincoln Electric Holdings Inc's revenue per share, combined with the 3-year revenue growth rate, indicates a strong revenue model. Lincoln Electric Holdings Inc's revenue has increased by approximately 10.10% per year on average, a rate that outperforms than approximately 61.82% of global competitors.
The company's 3-year EPS growth rate showcases its capability to grow its earnings, a critical component for sustaining dividends in the long run. During the past three years, Lincoln Electric Holdings Inc's earnings increased by approximately 19.80% per year on average, a rate that outperforms than approximately 60.87% of global competitors.
Lastly, the company's 5-year EBITDA growth rate of 11.20%, outperforms than approximately 55.24% of global competitors.
Conclusion
In conclusion, Lincoln Electric Holdings Inc's consistent dividend payments, impressive growth rate, sustainable payout ratio, high profitability, and robust growth metrics make it an attractive investment for dividend investors. The company's strong financial health and growth prospects suggest that it is well-positioned to sustain and possibly increase its dividend payments in the future. However, as with any investment, potential investors should carefully consider their own investment goals and risk tolerance before investing in Lincoln Electric Holdings Inc.
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This article first appeared on GuruFocus.
