The L.S. Starrett Co. : SCX-US: Dividend Analysis : December 19th, 2017 (record date) : By the numbers : December 20, 2017

Our analysis is based on comparing The L.S. Starrett Co. with the following peers – Alamo Group Inc., Snap-on Incorporated, Stanley Black & Decker, Inc., Q.E.P. Co., Inc. and P&F Industries, Inc. Class A (ALG-US, SNA-US, SWK-US, QEPC-US and PFIN-US).

The L.S. Starrett Co.’s dividend yield is 4.76 percent and its dividend payout is 444.44 percent. This compares to a peer median dividend yield of 1.71 percent and a payout level of 29.13 percent. This type of dividend performance might make it a good stock for dividend investors. However, the company’s average dividend quality score of 58 out of a possible score of 100, points to some weakness in the sustainability of its robust payout ratio, and makes its less attractive for dividend investors seeking current income.

Dividend Yield
Dividend Quality Score

Dividend Quality Overview

  • Over the last twelve months (prior to September 30, 2017), SCX-US paid a low quality dividend, which represents a yield of 4.76% at the current price.
  • Dividend quality trend has not been consistent over the last five years. Dividends were paid during each of these years — of these 2 were high quality and 3 were low quality.
  • The ending cash balance, with a dividend coverage of 4.30x, provides a substantial cushion in case of a significant reduction of cash flows in the future.
Dividend Quality Score Vs Dividend Yield

Quadrant label definitions. Hover to know more

High Score;High Yield, High Score;Low Yield, Low Score;Low Yield, Low Score;High Yield

Dividend Coverage

Over the last twelve months (prior to September 30, 2017), SCX-US paid a low quality dividend.

The source of the company’s cash to support the dividend paid over the last twelve months is operating cash flow (coverage of 1.16x), investing cash flow (coverage of -2.88x), issuance cash flow (coverage of -0.56x) and twelve-month prior cash (coverage of 7.57x), for a total dividend coverage of 5.30x.

SCX-US’s issuance cash flow includes outflows from net debt repayment (coverage of -0.38x) and net share buybacks (coverage of -0.19x). Thus, the total coverage including share buybacks is 5.49x, which reflects our assumption that the cash paid for share buybacks is discretionary and could instead be used to pay dividends.

Dividend Coverage by Cash Flow (TTM)

These coverage ratio factors imply that the firm had to dip into the beginning cash balance to pay the dividend, which suggests a low dividend quality.

Dividend History

Item 2013-06-30 2014-06-30 2015-06-30 2016-06-30 2017-06-30 Latest
Dividend Yield (%) 3.9 2.59 2.66 3.36 4.66 4.76
Dividend Payout (%) -2000 41.24 53.33 -19.9 285.71 444.44

A complete list of metrics and analysis is available on the company page.

Company Profile

The L.S. Starrett Co. engages in the manufacture of precision tools, gages, measuring instruments and saw blades for industrial, professional and consumer markets worldwide. It operates through the following geographical segments: North American Operations and International Operations. The company was founded by Laroy S. Starrett in 1880 and is headquartered in Athol, MA.


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