Updated 3/11/25

LCI Industries (NYSE: LCII) is a major player in the recreational vehicle (RV) and transportation components industry. If you’ve ever spent time in an RV or on a boat, there’s a good chance LCII made some of the parts. The company designs and manufactures everything from axles and chassis to furniture, electronics, and windows for RVs, manufactured homes, and marine vehicles.

For income-focused investors, LCII is particularly interesting because of its strong dividend history. The stock currently offers an above-average yield compared to the broader market, making it attractive for those looking for a steady income stream. But as with any dividend stock, it’s important to look beyond the yield and evaluate the company’s financial health, growth potential, and risk factors.

Key Dividend Metrics

📌 Forward Dividend Yield: 4.79%
📌 Trailing 12-Month Dividend Yield: 4.48%
📌 Annual Dividend Payout: $4.60 per share
📌 Payout Ratio: 76.79% (higher than ideal but manageable)
📌 Five-Year Average Dividend Yield: 3.14%
📌 Dividend Growth: Moderate, but slowing
📌 Ex-Dividend Date: March 7, 2025
📌 Next Dividend Payment Date: March 21, 2025

These numbers provide a quick snapshot of LCII’s dividend profile, but there’s much more to the story. Let’s dive deeper into the details.

Dividend Overview

LCII has built a reputation for being a reliable dividend payer. With a current yield of 4.79%, it offers significantly higher income potential than many stocks in the S&P 500. That makes it an appealing choice for investors looking to generate cash flow from their portfolio.

One concern, though, is the company’s payout ratio of 76.79%. That’s on the high side, especially for a company in a cyclical industry like RV manufacturing. A lower payout ratio, typically under 60%, is preferable for long-term sustainability. While LCII is still generating enough cash to cover its dividends, any prolonged downturn in earnings could make future increases difficult.

Dividend Growth and Safety

Dividend growth is an important factor for long-term investors. Over the past five years, LCII’s dividend yield has averaged 3.14%, meaning the current payout is well above historical levels. This could be a sign of a good buying opportunity—or a warning that investors are expecting slower growth ahead.

Free cash flow remains strong at $291.41 million, which is a good sign for dividend safety. But with such a high payout ratio, LCII doesn’t have much room to increase its dividend unless earnings pick up.

Debt levels also come into play. The company’s debt-to-equity ratio stands at 71.81%, which is manageable but not ideal. While not an immediate concern, higher borrowing costs in today’s interest rate environment could pressure future profitability. On a positive note, LCII’s current ratio of 2.82 indicates strong liquidity, meaning the company has the financial flexibility to meet its short-term obligations.

Chart Analysis

Overall Trend

The stock has been in a clear downtrend, with lower highs and lower lows dominating the price action over the past year. After reaching a peak above $120, it has steadily declined, recently closing at $96.07. The overall trend remains bearish, and there are no clear signs of a reversal yet.

Moving Averages

The 50-day moving average (orange line) crossed below the 200-day moving average (blue line) months ago, forming a death cross—a widely recognized bearish signal. The stock continues to trade below both moving averages, reinforcing the downward momentum. The 50-day moving average is sloping downward, showing that short-term sentiment is still negative, while the 200-day moving average is also declining, confirming long-term weakness.

Volume Analysis

Trading volume has been relatively steady, with some spikes on sharp declines, particularly during the recent selloff. This suggests that sellers are still dominant. There have been a few days of increased green volume, but they haven’t been strong enough to indicate a shift in sentiment. For any meaningful recovery, volume would need to pick up significantly on up days.

Relative Strength Index (RSI)

The RSI indicator shows that the stock is now in oversold territory, sitting near levels where it previously found short-term support. While this suggests a possible bounce in the near term, RSI alone isn’t enough to confirm a reversal. If the RSI starts climbing back toward 50 or higher, it could indicate momentum is shifting.

Recent Price Action

The last five trading days show the stock struggling to hold support near the $96 level, with lower wicks suggesting some buying interest. However, the upper wicks on recent candles indicate that sellers continue to step in on any bounce attempts. Unless the stock can reclaim at least the $100 level, the current downtrend is likely to remain intact.

Market Sentiment

With both moving averages sloping downward, persistent selling pressure, and an RSI in oversold territory, sentiment remains bearish. The stock may see short-term relief if buyers step in, but without a significant shift in volume and trend structure, the path of least resistance appears to be to the downside.

Analyst Ratings

Recent Upgrades

📈 CJS Securities upgraded LCI Industries from market perform to outperform in February 2025, setting a price target of $145. This upgrade reflects increased confidence in the company’s ability to capitalize on market trends and drive growth. Analysts pointed to improving supply chain conditions and a potential recovery in the RV industry as key factors behind the upgrade.

🔼 Truist Financial also raised its price target from $102 to $108, maintaining a hold rating. The firm noted that while short-term pressures remain, the stock’s valuation has become more attractive, and long-term prospects look stronger given expected industry stabilization.

Recent Downgrades

📉 StockNews.com downgraded LCI Industries from buy to hold in February 2025, signaling a more cautious stance on the stock’s performance in the near term. Analysts pointed to uncertain consumer demand for recreational vehicles and concerns about macroeconomic conditions that could weigh on future earnings.

⚠️ BMO Capital Markets lowered its rating from market perform to underperform in January 2025, reducing the price target from $105 to $100. The downgrade was attributed to concerns about margin pressure and weakening order volumes, which could impact profitability in the coming quarters.

🔽 Truist Securities also shifted its stance in January 2025, moving LCI Industries from buy to hold while cutting the price target from $140 to $110. The firm highlighted potential headwinds in the broader industry, suggesting that demand softness and rising costs could challenge earnings growth.

Consensus Price Target

💰 The current consensus price target among analysts covering LCI Industries is $121.50 over the next 12 months, reflecting a hold rating. This suggests a balanced view, with some analysts seeing potential upside while others remain cautious due to industry challenges and macroeconomic factors.

Earnings Report Summary

LCI Industries recently shared its latest earnings report, giving investors a clearer picture of how the company is navigating current market conditions. While sales were slightly down compared to the previous year, the company showed resilience in key areas, and there were a few bright spots that stood out.

Fourth Quarter Performance

In the final quarter of 2024, LCI reported $803 million in net sales, which was about 4 percent lower than the same time last year. Even with that dip, the company still pulled in a net income of $9.5 million, translating to $0.37 per share. That was better than what analysts had predicted, which was a pleasant surprise for investors keeping an eye on the stock.

Full Year Results

For the entire year, LCI brought in $3.7 billion in sales, down just 1 percent from the previous year. While revenue was slightly lower, the company managed to improve its overall profitability, with EBITDA climbing by $89 million. This suggests that LCI has been focusing on cutting costs and improving efficiency, which helped offset some of the revenue challenges.

Performance by Segment

• RV Original Equipment Manufacturer (OEM) Segment: Sales in this segment totaled $1.7 billion, with a 7 percent increase in North American travel trailer and fifth-wheel wholesale shipments. This was one of the stronger areas of the business.
• Automotive Aftermarket Segment: The aftermarket division posted 7 percent organic growth, with total aftermarket sales reaching $881 million. Market share gains helped drive these results, showing strength in customer demand.
• Adjacent Markets: This was the weakest segment, with sales dropping 13 percent. However, despite the decline, the aftermarket side still managed to keep a 12.6 percent operating profit margin, which speaks to the company’s ability to manage costs effectively.

Financial Strength

One of the highlights of the report was LCI’s ability to generate $370 million in cash flow from operations over the year. This helped the company bring its debt levels down to less than two times EBITDA, giving it more financial flexibility moving forward.

Looking Ahead

While some challenges remain, particularly in the adjacent markets segment, LCI Industries appears to be positioning itself well for the future. Its focus on cost management, strong performance in key areas like RV OEM sales and the automotive aftermarket, and improved financial stability give the company a solid foundation to work from in the months ahead.

Financial Health and Stability

LCII operates in a highly cyclical industry, meaning revenue and profitability can swing based on economic conditions. Right now, the RV market is in a bit of a slowdown following its pandemic boom, and that’s reflected in the company’s numbers.

Total revenue over the last twelve months was $3.74 billion, but quarterly revenue is down 4.1% year-over-year. Profit margins are also on the lower side, with a net profit margin of 3.82% and an operating margin of just 2.01%. These figures suggest that while the company is generating sales, rising costs and pricing pressure may be eating into earnings.

Despite these challenges, LCII is still generating positive net income, with $142.87 million in profit over the past year. Operating cash flow stands at $370.28 million, giving the company some breathing room when it comes to funding dividends, repaying debt, or reinvesting in the business.

Total debt is close to $1 billion, which isn’t necessarily a red flag but is something to monitor. Rising interest rates could make it more expensive to refinance debt or take on new financing. The company does have $165.76 million in cash, which helps provide a financial cushion.

Valuation and Stock Performance

LCII’s stock is trading at what looks like a reasonable valuation. The forward price-to-earnings (P/E) ratio sits at 15.72, which is lower than the trailing P/E of 17.16. This suggests that analysts expect earnings to improve, which could be a good sign for investors looking at the stock today.

Other key valuation metrics include:

• Price-to-sales ratio: 0.65, which is relatively low
• Price-to-book ratio: 1.76, indicating the stock is not significantly overvalued
• Enterprise value-to-EBITDA: 9.53, a fair valuation for an industrial company

Stock performance has been underwhelming, though. Over the past 12 months, LCII is down 14.41%, while the S&P 500 has gained 8.49%. The stock is currently trading below its 50-day moving average ($104.06) and its 200-day moving average ($110.59), which signals a short-term downtrend.

Risks and Considerations

While LCII offers an attractive dividend yield, there are some potential risks investors should be aware of.

Cyclical Industry Exposure

The RV industry is highly cyclical. Demand surged during the pandemic, but sales have since cooled. If economic conditions weaken further, LCII could see additional revenue declines, which would put pressure on earnings and dividend payments.

High Payout Ratio

At nearly 77%, the payout ratio leaves little room for error. If earnings decline, LCII might have to slow down or pause dividend increases. In a worst-case scenario, a dividend cut could be necessary.

Debt Levels and Interest Rates

With nearly $1 billion in debt, rising interest rates could increase LCII’s borrowing costs. While the company has decent liquidity, any prolonged economic downturn could make it harder to manage its debt load while maintaining dividend payments.

Market Sentiment and Short Interest

LCII has a short interest of 8.94% of its float, meaning a significant number of investors are betting against the stock. While this doesn’t mean the stock is doomed, it does suggest that sentiment remains cautious.

Final Thoughts

LCI Industries presents an interesting mix of strengths and risks for dividend investors. On one hand, it offers an above-average yield, solid free cash flow, and a reasonable valuation. On the other hand, its high payout ratio, cyclical exposure, and debt levels make it a riskier income play.

For those looking for a high-yield dividend stock, LCII could be appealing, especially if the RV market stabilizes. However, investors should be prepared for potential volatility and keep an eye on the company’s earnings trends. If cash flow remains strong, the dividend should be safe, but any prolonged weakness in revenue could change that outlook.

For risk-averse dividend investors, a company with a lower payout ratio and more stable industry exposure might be a better fit. But for those comfortable with some uncertainty, LCII could provide solid income potential with a chance for long-term recovery.