When it comes to dividend growth stocks, the Dividend Aristocrats are the “cream of the crop”. The Dividend Aristocrats are a group of stocks in the S&P 500, which have raised their dividends for 25+ consecutive years. You can see all 53 Dividend Aristocrats here.

However, just because a stock has a place on the list of Dividend Aristocrats, does not automatically make it a buy at any price. Valuation is an important consideration before buying any stock. Focusing on buying Dividend Aristocrats when they are undervalued, can be a recipe for outstanding long-term returns.

For example, diversified manufacturer Leggett & Platt (LEG) is a high-quality company, with a strong industry position, and 40+ years of dividend increases.

On February 5th, the company released quarterly earnings results, and missed analyst expectations for both revenue and earnings-per-share. The stock declined 4% in after-hours trading as a result.

Leggett & Platt has a 3%+ dividend yield, and should continue to increase its dividend each year. In addition, the stock appears to be undervalued.

Earnings Overview

Leggett & Platt has been in business since 1883, when J.P. Leggett, an inventor, created a bedspring that was superior to the existing products at that time. Today, Leggett & Platt designs and manufactures a wide range of products, found in most homes and automobiles.

The company has 17 business units, 20,000 employees, and 130 manufacturing facilities across 19 countries. Leggett & Platt manufactures products including bedding components, bedding industry machinery, steel wire, adjustable beds, carpet cushioning, and vehicle seat support systems.

Source: Investor Presentation, page 4

For the fourth quarter, Leggett & Platt had earnings-per-share of $0.59, on revenue of $984 million. Revenue increased 9% from the same quarter a year ago, while earnings-per-share rose 11%. Both figures missed analyst expectations. Leggett & Platt was expected to generate earnings-per-share of $0.62, and revenue of $998 million.