Despite a decade’s worth of turbulence for the market, much of it painful, it’s amazing how so many investors keep coming back to the same stocks and the same stories that have already punished their portfolios at least once. Examples of these let-downs include the “sure-fire” breakthrough drug that didn’t win approval, or a cutting-edge technology gadget that ended up with a dozen new and better competitors less than two years after its debut. Research in Motion (Nasdaq: RIMM) is a great example. It used to be the premier name in smartphones, and now it’s not even an afterthought, standing in the shadow of Apple’s (Nasdaq: AAPL) iPhone and Google’s (Nasdaq: GOOG) Android operating system.  

There’s an easier way. It’s also a more profitable way, in the end. Investors just have to give up their need to own the hottest, sexiest stocks they can brag about at the water cooler and instead focus companies that, you know, actually make money for shareholders.

#-ad_banner-#Leggett & Platt Inc. (NYSE: LEG) is one of those names.

A cutting-edge company? Not even close. But what it lacks in pizzazz, it more than makes up for in reliability.

The Leggett & Platt you didn’t know
When most investors think of Leggett & Platt, they think of a furniture manufacturer. And the description works. That’s not all Leggett & Platt is, however. The fact is, this $2.8 billion company is far more diversified than many recognize. It makes bedding and furniture retail fixtures, but also makes steel rods, wires and steel tubing for other furniture manufacturers. It also makes automotive seating, small motors and industrial sewing machines, tow-trailers and machines that actually turn wires into springs. 

In other words, there’s a lot of diversity here most people simply don’t know about.

The upside of this diversity is the same as it is for the likes of General Electric (NYSE: GE) or Procter & Gamble (NYSE: PG) — the more business lines it’s in, the less subject it is to economic slowdowns or competition. The strategy seems to be working for the company, too, and by extension, working for shareholders.

An impeccable growth streak
Investors looking for a healthy combination of income and growth will find Leggett & Platt’s long-term history to be very attractive.

For starters, the company has increased its dividend every year since 1987. No, that’s not a typo — the size of the dividend has grown each of the past 23 years, and 2011’s increase to $0.28 per share (beginning in the current quarter) makes this the 24th consecutive year of dividend growth. The shares currently yield just under 6%.

And yes, the company can afford to pay it.

On an operating basis, Leggett has been profitable each and every quarter for more than a decade. Things got a little tight in 2008 and 2009 when rising expenses and weakened demand crimped profit growth; per-share operating earnings slumped to $0.88 and $0.74 during those years, which was less than the actual annual dividend payouts of $1.00 and $1.02. Between solid cash flow and a mountain of cash and receivables, though, this highly-diversified manufacturer managed to navigate its way through the challenge, and dividends are fully funded by quarterly profits again.

Astute investors may notice that as of 2009 the annual top line has been smaller than the historical norm. (Revenue shrunk from roughly $4 billion in 2008 to $3.4 billion in 2010.) Usually such a shrinking top line is a red flag — an omen of an eventually-shrinking bottom line. In this case, however, it’s not a cause for alarm because it was a strategic contraction.

See, beginning in 2008 based on plans made in late 2007, Leggett & Platt began selling off divisions that either weren’t a good fit or weren’t profitable enough to continue operating. The decision appears to be the right one, considering the bottom line has increased since then, despite the smaller top line.

In other words, margins improved tremendously.

Things are going so well, in fact, that 2012’s anticipated net income in the $250 million range will bring the company to profitability levels seen in the glory days of 2006, when it earned $250 million and 2007, when it earned $300 million. The return to that bottom-line success is backed by a growing top line too, from $3.0 billion in 2009 to $3.4 billion in 2010 to an estimated an estimated $3.6 billion this year. 

At that point, the dividend won’t even be a question mark, and real growth possibilities are put back on the table. 

Risks to consider: No matter what, there’s always the risk of a global economic meltdown crimping even this very simple business model. If things truly soured to a degree that was stifling for Leggett & Platt, your investment’s value would be the least of your worries. This company is well-protected from all but the absolute worst of economic conditions.

Action to Take –> A $10,000 investment in Leggett & Platt back in 1987 would be worth more than $75,000 today. Along the way, that investment would have paid you more than $39,000 in dividends… and that was the old Leggett & Platt. The reinvented Leggett & Platt seems to be even more potent and profitable. Given that, the next 23 years should be at least as rewarding as the past 23, qualifying the stock as one of the few true “buy-and-hold forever” names that StreetAuthority Co-Founder Paul Tracy tells his Top-Ten Stocks subscribers are an absolute necessity in this — or any — market.