Spectrum Brands (NYSE:SPB) -- the holding company for household basics like Kwikset, Remington, George Foreman, Black & Decker, and Spectracide -- has put up some unlikely performance in the last year. Since this time last year, shares are up an incredible 213%. Granted, this consumer goods company is still down from its multiyear highs posted in 2017, but it's making progress reorganizing its corporate structure and benefiting from a spike in at-home spending. I would caution investors against chasing returns, but if dividend income is what you're after, this is a solid option.

An epic quarter of sales

First, it's worth spending some time on the incredible quarter Spectrum Brands just posted. For the three months ended Jan. 3, the first quarter of its fiscal 2021, revenue boomed 31% higher from the same period the previous year to $1.15 billion -- including a 28% increase in organic sales (which excludes the effects of acquisitions and divestitures). Normalizing consumer spending during the busy holiday shopping months after nine months of pandemic and retailer restocking led to the big jump. E-commerce was a standout, up 54% from a year ago.  

Even more pronounced, Spectrum's adjusted EBITDA (which excludes discontinued operations) doubled from last year to $204 million. That was good for a healthy EBITDA profit margin of 18%. A key area of focus for Spectrum in the last year has been improving its supply chain and getting its product mix optimized with retailers. Clearly the efforts are yielding results, as the bottom line accelerated at a much faster rate than sales. 

A man with his dog working on a construction project at home.

Image source: Getty Images.

The report card exceeded management's expectations from fall 2020, which had called for a 3% to 5% increase in sales in fiscal 2021 and adjusted EBITDA to increase in the mid-single-digit percentage range.

Given the exceptional single-quarter surge, Spectrum upped its outlook for 2021. It now says sales and adjusted EBITDA will increase by a high-single-digit percentage; that implies financial results will moderate from Q1 levels, but it's certainly a big improvement from the lackluster performance posted in 2020.  

Cleaning up the balance sheet with lower interest rates

By way of reminder, Spectrum sold off its Rayovac battery and Armor All car care lines to Energizer Holdings in 2019. As a result, the company has far less debt than it did before -- just $2.3 billion compared to about $6 billion a few years ago.

And with indebtedness that remains, the company has been refinancing to take advantage of low interest rates. It just completed repurchase of its debt due in 2024 and 2025 (which carried respective interest rates of 6.125% and 5.75%) and announced it would issue new debt due in 2031. As of this writing, the interest rate on that new debt issuance hasn't been announced. But given that the 10-year treasury is hanging around 1.6%, terms should be much better for Spectrum than in the notes it just retired.

I was wrong about Spectrum Brands stock last year. Its restructuring work has led to impressive results, and 2021 is off to an exceptionally good start. And though the economy is starting to reopen, a generation of new young homeowners bought houses during the pandemic -- many of them working remotely from home. This is no high-growth company, but Spectrum Brands and its stable of well-known household goods has solid slow-and-steady long-term prospects.

Don't expect a repeat of the epic market-beating returns of the last year. However, shares trade around 17 times one-year forward expected earnings per share. Paired with a 2% annual dividend yield, this looks like a pretty good deal on a mid-cap value stock for those investors looking for income.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.