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By Nathan Slaughter

There aren't many companies that can say they've paid dividends every year for the past four decades. Fewer still are those that have raised their dividends in every single one of those years.

Of that elite group, I know of only one company that has hiked its payouts at a robust 14% annual growth rate (essentially doubling dividends every five years on average).

Amazingly, this company has treated its owners to a pay raise every year since 1971. And as you can see from the table below, we're not talking about small token increases -- dividends have soared tenfold since 1990.

So what does this income machine do? Actually, it is one of the most boring industrial conglomerates you'll find. I'm talking about Leggett & Platt Inc. (NYSE:LEG), which supplies carpet underlay, office furniture, retail store fixtures, automotive seating and the underlying framework for beds, couches and recliners.

No one will mistake any of these product lines as exciting. If the stock market were middle school, Leggett & Platt might be the socially awkward kid sitting alone in the cafeteria, detached from cooler cliques like cloud computing. Fortunately, as Warren Buffett points out, the market is only a popularity contest in the short-term -- in the end, it's a "weighing machine."

Leggett & Platt has heavy competitive advantages. In fact, after 127 years in business, the company practically owns the industries in which it competes -- with dominant market share and zero large-scale competitors.

Its products aren't flashy, but they can be found in nearly every home, office and car in the country. Every year, powerful customers such as La-Z-Boy (NYSE:LZB), Sealy (NYSE:ZZ), Ashley Furniture and Home Depot (NYSE:HD) chip in about $3.3 billion in annual sales.

I could also talk about the firm's vertical integration, overseas expansion or even the fact that managerial compensation is tied to shareholder returns -- something that never hurts a company's performance. But the key to its recent (and future) success lies in a major strategic overhaul.

In November 2007, after a difficult stretch, management outlined four distinct goals:

1. Divest underperforming business units.
2. Improve profit margins on the remaining core.
3. Return more excess cash to shareholders.
4. Generate steady 5% sales growth utilizing product development and expansion into new markets.

Of course anyone can lay out a game-plan, but execution is key. Since that time, the company has unloaded seven weak business segments (pocketing $433 million) and expanded gross margins to their highest level since 2000. Leggett & Platt has also generated more than $1.2 billion in operating cash flow, raised its quarterly dividends by 50% and repurchased 31 million shares (one-fifth of the outstanding stock).

As for the end goal -- delivering total returns in the top one-third of the S&P 500 -- the company has actually overshot the mark. Through the end of the company's most recent quarter (Q3 2010), shareholders have enjoyed a total return (appreciation + dividends) of 37% -- beating 89% of stocks in the S&P 500.

Gone are the days of sacrificing efficiency and focus in the name of maintaining 15% revenue growth. Today, Leggett & Platt is happy to grow at one-third that pace. The company is far more disciplined with its checkbook: it has cut back on frivolous acquisitions and reserved capital expenditures strictly for its fastest-growing business units.

In fact, the company is spending about half of what it did a few years ago, which leaves millions more on the table for shareholders. What's more, shareholders are getting a larger share of the cash -- the target payout ratio has been bumped from 33% to 60%. All of this means one thing: the dividend increase recently announced won't be the last.

Before 2007, Leggett & Platt suffered through years of tepid results and sluggish stock prices. But when a turnaround is done right, as it was with this company, it can be a powerful performance booster for an investor's portfolio.

And here's what's really impressive: the company has managed all of this in the teeth of one of the worst recessions on record. Understandably, demand for mattress box springs and office chairs hasn't been quite up to par lately.

I'm confident the company (and its shares) can accomplish bigger and better results in 2011 -- aside from the lofty yield of almost 5%.

Disclosure: Neither Nathan Slaughter nor StreetAuthority, LLC hold positions in any securities mentioned in this article.

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Source: Best Dividend Stock of the Last 50 Years: Leggett & Platt