Should I Buy Lincoln National Corporation (LNC)? Finance YouTuber Analysis

The YouTuber suggests buying Lincoln National Corporation due to its 6.6% yield and current low valuation, with shares down 67% from 2021 highs. He attributes the decline to rising interest rates impacting its bond portfolio but expects a rebound as the Fed cuts rates. The company has maintained its dividend and grown it at a 4% annual pace, offering both income and potential capital appreciation.

“You've still gotten an opportunity to pick up this dividend payer at its lowest point in 30 years.”

The YouTuber suggests Lincoln National as a buy due to its significantly depressed share price, down 67% from 2021 highs, creating a decade-low valuation. The company's assets were negatively impacted by rising interest rates, but with the Fed pausing hikes and expected cuts, a revaluation is anticipated. This offers long-term price upside in addition to a high dividend yield.

“But that drop in shares has become a decade low in the valuation now trading for just 27 times sales and under 10 times earnings before the pandemic shares typically traded on a price to sales ratio of more than four or five times the current valuation”

The analyst recommends buying Lincoln National Corporation due to its significant sell-off (65% over the last year) despite being a financially healthy company with strong liquidity and pre-funded debt maturities. He notes its low P/E ratio of 2.7x compared to its historical average of 6x, suggesting significant price appreciation potential alongside a 6.6% dividend yield. The company's interest rate sensitivity, which hurt it recently, could become a tailwind if rates fall.

“The sell-off has taken LNC to just 2.7 times on a price to earnings basis... this means not only a solid six and a half percent dividend but serious price appreciation on this one.”

The analyst highlights Lincoln National's recent poor earnings report, which included a significant loss of $2.6 billion or $15.17 per share, largely due to unfavorable items related to DAC and reserve assumptions. A downgrade by Morgan Stanley due to an unexpected charge further weighs on investor confidence, making the stock one to avoid.

“never want to see earnings that are that bad that's a huge loss for the company and so that is why the stock is down so much in the month of November”