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Up to date on October twelfth, 2023 by Nathan Parsh
The Dividend Kings are a gaggle of simply 51 shares which have elevated their dividends for not less than 50 years in a row. We consider the Dividend Kings are among the many highest-quality dividend development shares to purchase and maintain for the long run.
With this in thoughts, we created a full listing of all 51 Dividend Kings. You’ll be able to obtain the complete listing, together with essential monetary metrics comparable to dividend yields and price-to-earnings ratios, by clicking on the hyperlink beneath:
Annually, we individually overview 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 Integrated, previously Mine Security Home equipment, was established in 1914. In the present day, it develops and manufactures security merchandise. Prospects come from quite a lot of industrial markets, together with oil & gasoline, hearth service, development, mining, and the army.
Supply: Investor Presentation
MSA Security’s main merchandise embrace 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% enhance 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 complete fiscal 12 months 2023, we anticipate adjusted EPS to equal about $6.00, which might signify a 6.2% enhance from the prior 12 months.
Development Prospects
MSA has put collectively a strong development report prior to now decade, rising earnings-per-share by a median fee of 10.6% per 12 months from 2013 by means of 2022 interval. Ends in 2020 fell reasonably, which was not surprising given the coronavirus pandemic. Nonetheless, earnings bounced again in 2021 and 2022, with 2023 outcomes anticipated to achieve a brand new excessive.
The corporate views its long-term outlook as wholesome, which bodes properly for its future development.
Supply: Investor Presentation
MSA’s acquisition of Globe Manufacturing in 2017 boosted the corporate’s income development profile and offered the corporate with an growth into new product classes, comparable to protecting clothes for firefighters. Improvements such because the thermal imaging digicam within the self-contained respiratory equipment and the corporate’s V-Collection line of fall safety have helped as properly.
As well as, the Sierra Monitor acquisition, Bristol Uniforms acquisition, Bacharach acquisition, and a powerful backlog cement the concept of the opportunity of continued development. 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 setting. Over the intermediate time period, we’re assuming a 7% annual development, barely beneath the corporate’s long-term development fee.
Aggressive Benefits & Recession Efficiency
MSA Security has a number of aggressive benefits that gas its development because the chief throughout the protection and safety merchandise business. It has a worldwide attain that opponents can not match, with roughly a 3rd of annual gross sales from exterior the Americas, and it might put money into development initiatives to retain its business management.
To make certain, there’s some cyclicality inherent within the enterprise – security is all the time essential, however budgets develop into squeezed at lesser instances. That mentioned, traders needs to be inspired that the dividend stored rising throughout recessions.
Earnings-per-share efficiency throughout the Nice Recession is beneath:
- 2007 earnings-per-share of $1.80
- 2008 earnings-per-share of $1.96 (8.9% enhance)
- 2009 earnings-per-share of $1.21 (38% decline)
- 2010 earnings-per-share of $1.05 (13% enhance)
That mentioned, the corporate remained extremely worthwhile throughout the Nice Recession. This allowed it to proceed rising its dividend every year throughout the recession, even when earnings declined. And because of its sturdy model portfolio, the corporate recovered rapidly after 2010.
Valuation & Anticipated Returns
Utilizing the present share value of almost $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 palms with a median P/E ratio of about 23.0 instances adjusted earnings. We really feel that this can be a honest valuation for the inventory contemplating the standard of the corporate.
With a present P/E ratio of just about 26 instances anticipated earnings, this suggests the opportunity of 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.
Apart from adjustments within the price-to-earnings a number of, future returns can be pushed by earnings development and dividends.
We anticipate 7% annual earnings development 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% increase in Could of 2023.
Complete returns may encompass the next:
- 7.0% earnings development
- 1.2% dividend yield
- 2.3% a number of compression
MSA is predicted to return 5.7% per 12 months by means of 2028. Consequently, now we have a maintain advice on MSA inventory, although the corporate’s skill to lift dividends by means of a number of recessions is spectacular.
Last Ideas
MSA Security is a powerful enterprise with aggressive benefits. Furthermore, the corporate additionally has an affordable development profile. Complete return potential is available in at nearly 6% per 12 months, pushed by 7% development and a 1.2% dividend yield, that are partially offset by a possible valuation headwind.
Subsequently, 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 on the lookout for shares with distinctive dividend traits, take into account the next Certain Dividend databases:
Thanks for studying this text. Please ship any suggestions, corrections, or inquiries to [email protected].
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