Portfolio Update
The FiveTwenty portfolio received $30.30 in dividends in the past week. OZK paid its quarterly dividend during the week.
| Past Week Dividend | $30.30 |
| Current Quarter Dividend (Q1 2022) | $133.74 |
| LifeTime Dividend | $2,244.55 |
| Estimated Annual Dividend | $4,108.54 |
The capital allocation for the week of 01/23/2022 to 01/29/2022 will be used to add to our position in Leggett & Platt (NYSE: LEG).
LEG – Position Update
Since our last check-in on LEG in week 45 of 2021, the share price decreased 11.6% from $44.15 to $39.03.
| TTM | Prev. Update | 10-year median | |
| Dividend Streak | 50 years | 50 years | |
| Yield | 4.25% | 3.71% | 3.52% |
| Payout Ratio | 59.93%1 | 59.21%1 | |
| P/E | 14.091 | 15.931 |
1 computed using TTM adjusted EPS of $2.77 as of Q3 2021
Q3 2021 earnings report
Did LEG’s latest earnings report raise any warning flags?
We discussed LEG’s Q3 2021 earnings in our last update. Overall, revenues grew 9%, net income dropped 9%, and adjusted EPS were 13% lower compared to Q3 2020.
| Revenue (in millions) | Net Income (in millions) | Adj. EPS . | |
| Q3 2020 | $1,207.6 | $107 | $0.82 |
| Q3 2021 | $1,319.2 | $97.2 | $0.71 |
| % Change | 9% | (9)% | (13)% |
Additional noteworthy developments during the quarter:
- On 11/09/2021, LEG declared Q4 2021 dividend of $0.42 per share, which marked the 50th consecutive year of annual dividend increases for the company.
- On 11/10/2021, the company name Mitch Dolloff, the current COO, as its new CEO effective Jan 1, 2022. Karl Glassman, the previous CEO, became executive chairman.
Thesis
Why are we adding to our position in LEG?
Our investment thesis and reasoning remains unchanged from our previous update. Furthermore, we regard the share price decline as an opportunity to add to our holdings in the company at an attractive valuation. The current yield is significantly above the historical median, and the PE ratio is materially below its historical median.
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