Last update on 2024-06-27

Lifetime Brands (LCUT) - Dividend Analysis (Final Score: 3/8)

Explore Lifetime Brands (LCUT) dividend analysis. Understand its stability, growth rate, coverage, and industry comparison with our 8-criteria scoring system.

Short Analysis - Dividend Score: 3

We're running Lifetime Brands (LCUT) against the 8-criteria scoring system to evaluate the performance and stability of a company's dividend policy.

The analysis assesses Lifetime Brands (LCUT) based on an 8-criteria system evaluating the stability and performance of its dividend policy. Key metrics include dividend yield, growth rate, payout ratio, earnings and cash flow coverage, stability and longevity of dividends, and stock repurchases. A high dividend yield is attractive to investors, but LCUT’s yield is below the industry average, and its inconsistent growth rate does not meet the 5% annual growth criterion. Although the average payout ratio is well below the 65% threshold, fluctuations in coverage by earnings and cash flow suggest challenges in stable dividend issuance. LCUT has not maintained dividend payments consistently for over 25 years, and its sporadic stock repurchases indicate a lack of commitment to regular shareholder returns.

Insights for Value Investors Seeking Stable Income

Based on the analysis, Lifetime Brands (LCUT) may not be the best choice for income-focused investors due to its inconsistent dividend yield, lack of consistent growth, and unstable coverage by earnings and cash flow. Investors seeking reliable and steady dividend returns might want to explore other options with more stable performance and a stronger commitment to regular dividends and stock repurchases.

For those who are interested in delving deeper into the specifics, the subsequent section provides a comprehensive exploration of the criteria.

Dividend Yield Higher than the Industry Average?

Explain what Dividend Yield indicates and why it is important for investors to consider when they look at a company like Lifetime Brands (LCUT)

Dividend yield is a critical metric for investors because it represents the annual return on investment from dividends alone, relative to the stock's price. A higher dividend yield indicates a potentially higher return from dividends, making the stock attractive to income-focused investors. Lifetime Brands (LCUT) has a current dividend yield of 1.2817%, which is lower than the industry average of 1.99%. Looking at the historical data, LCUT's dividend yield has seen significant fluctuations over the past 20 years, peaking in 2008 at 7.1186% and having periods of no dividends (2009-2010). In recent years, the dividend yield has been relatively stable but still below the industry average. This trend suggests that LCUT may not be the most attractive option for income-seeking investors compared to its industry peers, particularly considering its yield is currently below the average. Therefore, this trend is somewhat negative from a dividend yield perspective, reflecting that LCUT may be more focused on reinvestment or other financial strategies rather than returning income to shareholders through dividends.

Average annual Growth Rate higher than 5% in the last 20 years?

Criterion 1.1 assesses whether Lifetime Brands (LCUT) has had a Dividend Growth Rate exceeding 5% over the past 20 years. This metric is key for understanding the long-term sustainability and growth potential of dividend payouts, which investors often seek for income stability.

The given data shows intrinsic fluctuations in the Dividend Per Share Ratio (DPSR) over the last 20 years. For example, 33.3333% (2012) and 49.4186% (2017) represent highlight years, but instances like -100% (2009) and 0% (multiple years) indicate suspensions or non-issuance of dividends. Overall, there is a lack of consistent growth as reflected by an average dividend ratio of -1.4664666666666673. Hence, the overall trend does not meet the criterion of a 5% Dividend Growth Rate consistently over the past 20 years. This might be a negative indicator for potential long-term dividend-seeking investors, despite some positive years.

Average annual Payout Ratio lower than 65% in the last 20 years?

The average payout ratio indicates the proportion of earnings a company distributes as dividends to shareholders. An average payout ratio lower than 65% suggests that the company retains sufficient profits for growth and financial stability while rewarding shareholders.

Lifetime Brands (LCUT) has an average payout ratio of 5.34% over the last 20 years, well below the 65% threshold. This is generally a positive trend as it indicates a conservative approach to dividend distribution, prioritizing earnings retention for reinvestment. However, there are significant fluctuations in certain years—such as 2014, 2017, 2018, and 2021 with negative or abnormally high payout ratios—raising concerns about the company's earnings volatility. Despite these anomalies, the overall low average payout ratio supports financial stability and future growth prospects.

Dividends Well Covered by Earnings?

Dividends are well covered by the earnings.

Lifetime Brands (LCUT) has experienced considerable fluctuations in its Earnings per Share (EPS) over the years. Notably, the EPS has fluctuated from a high of 1.64 in 2012 to a low of -4.0939 in 2008. A well-covered dividend by earnings is indicated when the EPS adequately covers the dividend per share. From 2003 to 2023, LCUT’s Dividend Coverage Ratio has generally been low and inconsistent. For instance, ratios of 0.403 in 2003 and a negative coverage ratio in several years, such as -1.9457 in 2018, demonstrate challenges in maintaining stable dividend coverage. Periods with negative EPS or zero dividends highlight misalignments between earnings and dividends. Therefore, this inconsistent trend suggests that LCUT’s dividends have often not been well-covered by its earnings, representing a cautious outlook for dividend sustainability.

Dividends Well Covered by Cash Flow?

Dividends well covered by cash flow indicate a company's ability to sustainably pay out dividends using the cash it generates from operations, rather than relying on external financing.

Analyzing Lifetime Brands (LCUT) free cash flow (FCF) versus its dividend payouts from 2003 to 2023 reveals several important trends. A ratio below 1.0 suggests that dividends are not fully covered by FCF, and a ratio above 1.0 indicates sufficient coverage. LCUT's FCF coverage ratio has fluctuated considerably, with negative values in 2006, 2008, and 2014 showing highly unsustainable levels. The ratio for most years is below 1, signaling limited coverage. Notably, 2009 and 2010 show a ratio of 0 due to no dividends being paid. This erratic trend indicates that LCUT has struggled to consistently cover dividends with FCF, suggesting potential risks for future dividend sustainability. The coverage ratio climbing to its highest at 1.81 in 2004 implies exceptional performance in FCF. However, recent years (2018-2023) still show values primarily below 0.5, flagging continual concerns about sustainable dividend coverage without deteriorating financial health by relying solely on internal cash generation.

Stable Dividends Since the Company Began Paying Dividends?

Explain the criterion for Lifetime Brands (LCUT) and why it is important to consider

Stable dividends over the past 20 years are critical as they provide a predictable income stream for investors. This criterion ensures that income-seeking investors, such as retirees, can rely on the company for regular payouts without worrying about significant disruptions. A drop of more than 20% in dividends could indicate financial instability or a change in the company's commitment to returning capital to shareholders.

Dividends Paid for Over 25 Years?

The longevity of a company's dividend payments is a key factor for potential investors. It indicates financial stability and a shareholder-friendly policy, building investor confidence. A history of paying dividends for over 25 years is generally considered a strong signal of a company's reliability and commitment to returning value to its shareholders.

Lifetime Brands (LCUT) has a mixed dividend history. The company began paying dividends in 1998 with an initial dividend per share of $0.2485. Dividends remained stable for several years, showing increments occasionally until 2008. However, from 2009 for two consecutive years, the company paid no dividends, which may raise concerns about its consistency in returning value to shareholders. In recent years, from 2012 onwards, dividends have seen moderate fluctuations, with the latest dividend in 2023 being $0.086 per share, down from $0.172 in previous years. The trend shows that LCUT has not paid dividends consistently for over 25 years; interruptions and fluctuations might indicate varying financial stability. This mixed trend does not entirely meet the criterion, suggesting caution for investors prioritizing long-term dividend reliability.

Reliable Stock Repurchases Over the Past 20 Years?

Evaluating stock repurchases is critical in analyzing a company's commitment to returning value to shareholders by reducing outstanding shares.

Lifetime Brands (LCUT) has seen limited and sporadic stock repurchases over the past 20 years. In particular, significant buybacks were observed only in the years 2007, 2008, and 2023. This is evidenced by a visible reduction in the number of shares during these years: from 13,245,471 in 2006 to 11,976,000 in 2008, and from 21,558,000 in 2022 to 21,195,000 in 2023. On average, the reduction in shares due to repurchases is around 3.7% over the 20-year period, indicating that substantial repurchases are neither frequent nor consistent. This trend suggests that LCUT may not prioritize steady share buyback programs, which can be a concern for investors looking for regular capital returns through repurchase plans.