Updated 3/11/25
Lincoln Electric Holdings might not be the first name that comes to mind when thinking about dividend stocks, but for those looking for steady, long-term income, it’s a company worth a closer look. As a leader in welding products and automation solutions, Lincoln Electric has been in business for over a century, steadily growing and rewarding its shareholders along the way.
While the dividend yield isn’t particularly high, this is a company with a strong track record of increasing payouts year after year. For investors who value stability, financial strength, and dividend growth, Lincoln Electric checks a lot of the right boxes. Let’s break down what makes this stock appealing and where there might be some concerns.
Key Dividend Metrics
📌 Dividend Yield: 1.52%
💰 Annual Dividend: $3.00 per share
📈 5-Year Average Dividend Yield: 1.57%
🔄 Consecutive Dividend Increases: Over 25 years
⚖️ Payout Ratio: 35.34%
📆 Next Dividend Payment Date: April 15, 2025
🚀 5-Year Dividend Growth Rate: Around 10%
Dividend Overview
Lincoln Electric is a classic example of a company that prioritizes consistent dividend growth over a high initial yield. At 1.52%, the current yield might not stand out compared to some high-yielding stocks, but what it lacks in yield, it makes up for in reliability. The company has increased its dividend for over 25 consecutive years, showing a commitment to rewarding long-term investors.
The payout ratio of 35.34% suggests there’s plenty of room for future increases. This is well below levels that would signal concern, meaning Lincoln Electric has flexibility to continue growing the dividend while still reinvesting in its operations. For investors who like companies with room to grow, this is a solid sign of stability.
Dividend Growth and Safety
Dividend growth is one of Lincoln Electric’s strongest points. Over the past five years, the company has increased its dividend at an average annual rate of about 10%. That’s an impressive growth rate, especially for a company with a low payout ratio.
A key factor supporting this growth is profitability. Lincoln Electric generates strong returns, with a return on equity of 35.36% and a return on assets of 12.77%. These numbers indicate that management is putting capital to work effectively, creating value for shareholders.
Free cash flow is another bright spot, with $445.65 million in levered free cash flow over the past year. This reinforces that the company can comfortably cover dividends while maintaining financial flexibility.
Chart Analysis
The stock chart for Lincoln Electric Holdings (LECO) provides insight into recent price action, moving averages, volume trends, and momentum indicators. The price has been in a mixed trend, with signs of both recovery and resistance near key technical levels.
Moving Averages and Trend Analysis
The 50-day moving average (orange line) and 200-day moving average (blue line) are in focus here. The 50-day moving average has been trending below the 200-day moving average for a while, which is generally considered a bearish signal. The price recently attempted to break above the 200-day moving average but failed to hold, showing that sellers are still active at higher levels.
Right now, the price is hovering near the 200-day moving average, suggesting a critical decision point for the stock. If it can reclaim and hold above this level, it might signal a potential shift in trend. However, continued weakness below it could confirm that the longer-term downtrend is still intact.
Recent Price Action
The latest trading session showed a high of 204.64 and a low of 196.00, closing at 197.61. The price attempted to push higher but faced resistance near 204, eventually closing lower. This type of action can indicate profit-taking or continued hesitation from buyers.
Looking at the last five candlesticks, there is a mix of indecision and selling pressure. Some wicks on the upper side of the candles suggest sellers stepping in at higher prices. Meanwhile, the lower shadows on certain candles indicate that buyers are still active, preventing a deeper decline.
Volume and Market Participation
The volume for the latest session stood at 302,261, which is in line with recent trading activity. There have been a few notable volume spikes in past months, particularly during price declines, suggesting increased selling pressure at those points.
A key observation is that volume has not significantly picked up during recent rallies, which raises questions about the conviction behind buying moves. Ideally, stronger volume would accompany upward price movements to confirm a more sustained recovery.
Relative Strength Index (RSI) and Momentum
The RSI indicator is positioned in the lower part of the chart, showing a reading that is neither in the overbought nor oversold territory. It previously dipped into oversold levels, prompting a rebound, but has since cooled off.
Momentum appears to be fading after the recent bounce, suggesting that the stock may need further consolidation before making a decisive move. If RSI moves back toward overbought conditions, it could indicate another round of selling pressure. Conversely, a drop into oversold levels might present an opportunity for value-seeking investors.
Analyst Ratings
Lincoln Electric Holdings (LECO) has recently received a mix of analyst ratings, reflecting both optimism and caution about its future prospects.
📈 Upgrades
📊 Barclays – On February 18, 2025, Barclays maintained its “Overweight” rating for Lincoln Electric and raised the price target from $220 to $235. The firm cited strong operational efficiency and improving margins as reasons for the upgrade, believing the company is well-positioned for steady earnings growth.
🚀 KeyBanc – On February 14, 2025, KeyBanc reiterated its “Overweight” rating while increasing the price target from $230 to $245. Analysts pointed to resilient demand in industrial automation and the company’s ability to manage costs effectively, making it an attractive long-term investment.
📉 Downgrades
⚠️ Stifel – On January 24, 2025, Stifel maintained a “Hold” rating but lowered the price target from $216 to $211. Analysts noted concerns over slower-than-expected revenue growth and macroeconomic headwinds that could impact earnings in the near term.
🔻 Morgan Stanley – On October 14, 2024, Morgan Stanley adjusted its price target downward from $192 to $174, keeping an “Equal-Weight” rating. The downgrade was based on weaker industrial sector demand and concerns about valuation, suggesting that growth might be limited in the short term.
🎯 Consensus Price Target
The 12-month consensus price target for Lincoln Electric currently stands at approximately $230.78, with estimates ranging from $187 on the low end to $255 on the high end. This range reflects differing views on how well the company can navigate industry challenges and capitalize on its strengths.
These recent updates highlight the balance between confidence in Lincoln Electric’s long-term potential and short-term risks, giving investors insight into how Wall Street views the stock at this stage.
Earnings Report Summary
Lincoln Electric recently shared its latest earnings results, giving investors a look at how the company performed over the past quarter and full year. While sales took a bit of a dip, the company still managed to maintain strong profitability, showing why it’s been such a reliable name in the industrial sector.
Fourth Quarter 2024 Highlights
The company reported $1.022 billion in net sales for the fourth quarter, down 3.4% from the previous year. The decline came mostly from a drop in organic sales and some foreign exchange headwinds, though recent acquisitions helped offset some of the weakness.
Despite the lower sales, Lincoln Electric still pulled in $177 million in operating income, with adjusted figures coming in slightly higher at $185.6 million, or 18.2% of sales. That shows the company is staying efficient, even as demand cools off a bit.
On the earnings side, diluted earnings per share (EPS) came in at $2.47, but after adjusting for special items, it landed at $2.57 per share, which is a solid number given the conditions.
Full Year 2024 Performance
For the full year, Lincoln Electric reported $4.008 billion in total sales, which was down 4.4% from the previous year. The drop was mainly due to lower organic sales, but acquisitions helped soften the blow.
Operating income for the year was $636.5 million, or 15.9% of sales, and after adjustments, it was $704.4 million, or 17.6% of sales. EPS for the full year came in at $8.15, and adjusted EPS landed at $9.29.
Lincoln Electric also remained strong on the cash flow front, generating $599 million in operating cash flow. A good portion of that went back to shareholders, with $426 million returned through dividends and share buybacks.
Segment Breakdown
- Americas Welding: Sales fell 7.2%, but acquisitions helped bring in some additional revenue.
- International Welding: This segment took a bigger hit, with sales dropping 15.7%, partly due to foreign exchange pressures.
- The Harris Products Group: One bright spot was this segment, which saw a 2.7% increase in sales, thanks to contributions from recent acquisitions.
Management’s Take
CEO Steven Hedlund acknowledged that demand in the industrial sector has been softer, but he pointed to strong cost management and operational improvements as key reasons the company was still able to post solid earnings. Lincoln Electric remains focused on long-term growth, with continued investments to keep the business competitive while still rewarding shareholders.
Overall, the numbers show a company that’s handling market challenges well, keeping margins strong, and staying focused on future opportunities.
Financial Health and Stability
Lincoln Electric has built a strong business, but there are a few areas to keep an eye on.
- Total revenue over the last twelve months was $4.01 billion, but there was a year-over-year decline of 3.4%.
- Net income remains healthy at $466.11 million, though earnings growth slowed.
- The debt-to-equity ratio stands at 86.68%, meaning Lincoln Electric has taken on some leverage.
While debt levels aren’t extreme, it’s something to watch. The company has $1.15 billion in total debt, but with operating cash flow at nearly $600 million, it appears well-managed.
Lincoln Electric also maintains solid profit margins, with an operating margin of 18.01%. This suggests the company is running efficiently, keeping costs under control, and maintaining pricing power in its industry.
Valuation and Stock Performance
Valuation is where things get interesting. At a trailing price-to-earnings ratio of 24.25 and a forward P/E of 20.92, Lincoln Electric isn’t exactly a bargain. Investors are paying a premium for a company with stable earnings and strong financials.
The stock price has seen some fluctuations, trading in a 52-week range between $169.51 and $261.13. At its current price of around $195, it sits closer to the lower end of that range, suggesting there could be room for upside if market sentiment improves.
The PEG ratio, which factors in growth expectations, is 1.50. That number suggests the stock is fairly valued relative to expected earnings growth, but it’s not a deep value play. Investors who buy at these levels need to be comfortable with paying for quality and stability rather than chasing a bargain.
Risks and Considerations
No stock is without risk, and Lincoln Electric has a few factors that investors should keep in mind.
- Slowing Revenue Growth – The 3.4% year-over-year revenue decline could be a sign that growth is slowing. If this trend continues, it could impact future earnings and, in turn, dividend growth.
- Economic Sensitivity – As a manufacturing company, Lincoln Electric’s business is tied to industrial spending. In an economic downturn, demand for welding equipment could take a hit.
- Debt Load – While not alarming, the debt-to-equity ratio suggests the company has taken on a fair amount of leverage. Rising interest rates could make debt repayment more expensive over time.
- Premium Valuation – The stock isn’t cheap. Investors looking for a bargain may find better opportunities elsewhere, especially if market conditions push industrial stocks lower.
Final Thoughts
For dividend investors who value stability, financial strength, and steady income growth, Lincoln Electric is an appealing choice. The company has a long history of rewarding shareholders and a conservative payout ratio that supports future dividend increases.
There are some challenges, particularly around revenue growth and valuation, but overall, the company remains in a strong position. For investors who prioritize quality over high yield, Lincoln Electric remains a stock worth watching.
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