Up to date on October twelfth, 2023 by Nathan Parsh
The Dividend Kings are a bunch of simply 51 shares which have elevated their dividends for not less than 50 years in a row. We imagine the Dividend Kings are among the many highest-quality dividend progress shares to purchase and maintain for the long run.
With this in thoughts, we created a full record of all 51 Dividend Kings. You possibly can obtain the total record, together with necessary monetary metrics comparable to dividend yields and price-to-earnings ratios, by clicking on the hyperlink under:
Annually, we individually evaluate all of the Dividend Kings. The following within the sequence is MSA Security (MSA). This text will analyze the corporate in larger element.
Enterprise Overview
MSA Security Included, previously Mine Security Home equipment, was established in 1914. In the present day, it develops and manufactures security merchandise. Clients come from quite a lot of industrial markets, together with oil & gasoline, hearth service, development, mining, and the navy.
Supply: Investor Presentation
MSA Security’s main merchandise embody gasoline and flame detection, air respirators, head safety, fall safety, air-purifying respirators, and eye safety gear.
In late July, MSA launched second-quarter monetary outcomes. For the quarter, income got here in at $447.3 million, a 20.1% improve in comparison with Q2 2022. Gross sales within the Americas phase had been up 22%, whereas gross sales within the Worldwide phase improved by 16%.
Adjusted earnings equaled $72.1 million, or $1.83 per share, in comparison with $50.9 million, or $1.29 per share, in Q2 2022. For the total fiscal 12 months 2023, we anticipate adjusted EPS to equal about $6.00, which might symbolize a 6.2% improve from the prior 12 months.
Progress Prospects
MSA has put collectively a stable progress report previously decade, rising earnings-per-share by a median fee of 10.6% per 12 months from 2013 via 2022 interval. Ends in 2020 fell reasonably, which was not sudden given the coronavirus pandemic. Nonetheless, earnings bounced again in 2021 and 2022, with 2023 outcomes anticipated to succeed in a brand new excessive.
The corporate views its long-term outlook as wholesome, which bodes nicely for its future progress.
Supply: Investor Presentation
MSA’s acquisition of Globe Manufacturing in 2017 boosted the corporate’s income progress profile and offered the corporate with an enlargement into new product classes, comparable to protecting clothes for firefighters. Improvements such because the thermal imaging digicam within the self-contained respiration equipment and the corporate’s V-Collection line of fall safety have helped as nicely.
As well as, the Sierra Monitor acquisition, Bristol Uniforms acquisition, Bacharach acquisition, and a robust backlog cement the concept of the potential for continued progress. Outcomes had been down in 2020 however nonetheless resilient, falling lower than -7%.
Furthermore, a lot of MSA’s merchandise proceed to be in demand within the present surroundings. Over the intermediate time period, we’re assuming a 7% annual progress, barely under the corporate’s long-term progress fee.
Aggressive Benefits & Recession Efficiency
MSA Security has a number of aggressive benefits that gas its progress because the chief throughout the protection and safety merchandise business. It has a world attain that rivals can’t match, with roughly a 3rd of annual gross sales from outdoors the Americas, and it may put money into progress initiatives to retain its business management.
To make certain, there’s some cyclicality inherent within the enterprise – security is all the time necessary, however budgets grow to be squeezed at lesser occasions. That mentioned, buyers ought to be inspired that the dividend saved rising throughout recessions.
Earnings-per-share efficiency through the Nice Recession is under:
2007 earnings-per-share of $1.80
2008 earnings-per-share of $1.96 (8.9% improve)
2009 earnings-per-share of $1.21 (38% decline)
2010 earnings-per-share of $1.05 (13% improve)
That mentioned, the corporate remained extremely worthwhile through the Nice Recession. This allowed it to proceed rising its dividend annually through the recession, even when earnings declined. And because of its robust model portfolio, the corporate recovered rapidly after 2010.
Valuation & Anticipated Returns
Utilizing the present share value of practically $155 and anticipated earnings-per-share of $6.00 for the 12 months, MSA inventory trades for a price-to-earnings ratio of 25.8. Over the previous ten years, shares of MSA have traded arms with a median P/E ratio of about 23.0 occasions adjusted earnings. We really feel that this can be a truthful valuation for the inventory contemplating the standard of the corporate.
With a present P/E ratio of virtually 26 occasions anticipated earnings, this means the potential for a valuation tailwind over the intermediate time period. Returning to our goal price-to-earnings ratio by 2028 would scale back annual returns by 2.3% over this era.
Other than modifications within the price-to-earnings a number of, future returns will probably be pushed by earnings progress and dividends.
We anticipate 7% annual earnings progress over the following 5 years.
As well as, MSA inventory has a present dividend yield of 1.2%. The corporate has elevated its dividend for 53 consecutive years, together with a 2.2% elevate in Might of 2023.
Complete returns might encompass the next:
7.0% earnings progress
1.2% dividend yield
2.3% a number of compression
MSA is predicted to return 5.7% per 12 months via 2028. Consequently, we’ve got a maintain advice on MSA inventory, although the corporate’s capacity to lift dividends via a number of recessions is spectacular.
Ultimate Ideas
MSA Security is a robust enterprise with aggressive benefits. Furthermore, the corporate additionally has an inexpensive progress profile. Complete return potential is available in at virtually 6% per 12 months, pushed by 7% progress and a 1.2% dividend yield, that are partially offset by a possible valuation headwind.
Due to this fact, MSA shares earn a maintain ranking.
Moreover, the next Certain Dividend databases include probably the most dependable dividend growers in our funding universe:
In case you’re in search of shares with distinctive dividend traits, contemplate the next Certain Dividend databases:
Thanks for studying this text. Please ship any suggestions, corrections, or inquiries to [email protected].
