There is another way as well. I have used it over the years with very good results.
Use your stencil as mentioned above. The problem is the grain of the leather.
Go to your local craft shop and buy a stencil brush. This is a round brush with short ,dense bristles. Take you paint and spread about 1/4 Tblspn on a piece of wax paper or sandwich-wrap. Dab the brush in the paint and make sure the edge/tip of the bristles are covered evenly. Now, this is where everyone fouls-up! Dab the brush onto a piece of newspaper or copy paper until the brush is 95% empty, yes EMPTY.
Now go over and dab the stencil. use just enough force to leave paint in the cut-out of the letter. As the brush goes out of paint, repeat the process. Fill,paper empty to 95%, paint letter.
It works so well and the quality of the letters is 1ST rate. You almost cannot tell it from original.
my two cents.