L Brands Inc (NYSE:LB) currently pays its investors over 6% per year in dividends and might be a great stock to add to your portfolio as the share price could have a lot of upside. With brands like Victoria’s Secret and Bath & Body Works, the company has a strong presence in retail and has stores in many different countries. Although the company saw just 3% sales growth in the last year, L Brands has averaged a profit margin of around 10% in the past two years.
The company pays out $2.40 in dividends per share, which is a manageable 70% of the company’s earnings per share in the trailing twelve months. L Brands has doubled its dividend in just three years, from $0.30 being paid out every quarter in 2013 to $0.60 payments in 2016. The company has not made an increase in its payouts this year.
In addition to offering a good yield with strong growth, in the three previous years L Brands had issued a special cash dividend along with the company’s first dividend payment, which did not happen this year. In the past two years the company added an extra $2 per share on top of the already strong yield, effectively almost doubling the payout. However, in prior years the stock was trading at a higher value so the yield would not have been as high as it is right now.
Year-to-date the share price has dropped 40%, but in the last month it has declined just 3% so the good news is the stock may have found a bottom. At a price to earnings multiple of over 11, this is a quality dividend stock that doubles as a good value investment as well.
