Revealed on Might 4th, 2022 by Bob Ciura
The Dividend Kings are a gaggle of simply 44 shares which have elevated their dividends for a minimum of 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 listing of all 44 Dividend Kings. You’ll be able to obtain the complete listing, together with necessary monetary metrics corresponding to dividend yields and price-to-earnings ratios, by clicking on the hyperlink beneath:
Every year, we individually evaluation all of the Dividend Kings. The subsequent within the collection is MSA Security (MSA).
MSA Security has elevated its dividend for over 50 consecutive years, together with a latest 4% elevate. This text will analyze the corporate in higher element.
MSA Security Integrated, previously Mine Security Home equipment, was established in 1914. Immediately, 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 embody gasoline and flame detection, air respirators, head safety, fall safety, air purifying respirators, and eye safety gear.
On July 1st, 2021, MSA acquired Bacharach, Inc., a pacesetter in gasoline detection applied sciences, for $337 million.
On February seventeenth, 2022, MSA launched This fall and full 12 months 2021 outcomes for the interval ending December thirty first, 2021. For the quarter income got here in at $410.3 million, a 5.7% enhance in comparison with This fall 2020. Gross sales within the Americas section have been up 3.4%, whereas gross sales within the Worldwide section elevated 9.5%. Adjusted earnings equaled $66 million or $1.67 per share in comparison with $52 million or $1.33 per share in This fall 2022.
For the 12 months MSA generated $1.4 billion or income, up 4% in comparison with 2020, pushed by a 9% enhance in core product income. Adjusted earnings equaled $185 million or $4.68 per share in comparison with $181 million or $4.60 per share.
MSA has put collectively a strong progress file prior to now decade, rising by a median fee of 8.5% per 12 months throughout the 2008 by means of 2019 interval. Ends in 2020 fell reasonably, which isn’t surprising given the coronavirus pandemic. Nevertheless, earnings bounced again in 2021 and we anticipate additional positive aspects for 2022.
The corporate views the present surroundings 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 supplied the corporate with an growth into new product classes corresponding 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 powerful backlog cement the thought of the opportunity of continued progress. Outcomes have been down in 2020, however nonetheless resilient, falling lower than -7%.
Furthermore, lots of MSA’s merchandise proceed to be in demand within the present surroundings. Over the intermediate time period we’re assuming 6% annual progress.
Aggressive Benefits & Recession Efficiency
MSA Security has a number of aggressive benefits that gas its progress because the chief throughout the security and safety merchandise trade. It has a world attain that rivals can not match, with roughly a 3rd of annual gross sales from exterior the Americas, and it might probably put money into progress initiatives to retain its trade management.
To make sure, there’s some cyclicality inherent within the enterprise – security is at all times necessary, however budgets grow to be squeezed in lesser occasions. That stated, buyers ought to be inspired that the dividend saved 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 stated, 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 robust model portfolio, the corporate recovered rapidly after 2010.
Valuation & Anticipated Returns
Utilizing the present share worth of ~$127 and anticipated earnings-per-share of $5.00 for the 12 months, MSA inventory trades for a price-to-earnings ratio of 25.4. Over the previous 10 years shares of MSA have traded arms with a median P/E ratio of about 23 occasions adjusted earnings. We’re utilizing this a number of as a beginning place for a “honest” valuation.
Nevertheless, with a present P/E ratio of 25.4 occasions anticipated earnings, this suggests the opportunity of a valuation headwind over the intermediate time period. Returning to our goal price-to-earnings ratio by 2027 would scale back annual returns by 2.0% over this time period.
Other than adjustments within the price-to-earnings a number of, future returns can be pushed by earnings progress and dividends.
We anticipate 6% annual earnings progress over the subsequent 5 years. As well as, MSA inventory has a present dividend yield of 1.5%.
Whole returns may encompass the next:
- 6.0% earnings progress
- -2.0% a number of reversion
- 1.5% dividend yield
MSA is predicted to return 5.5% per 12 months by means of 2027. Consequently, we’ve got a maintain suggestion on MSA inventory, although the corporate’s potential to boost dividends by means of a number of recessions is spectacular.
The corporate has over 50 consecutive years of dividend progress after rising its dividend by 4% in Might 2022.
MSA Security is a powerful enterprise with aggressive benefits. Furthermore, the corporate additionally has an inexpensive progress profile. Whole return potential is available in at 5.5% per 12 months, pushed by 6% progress and a 1.5% dividend yield, offset by the opportunity of a valuation headwind. Subsequently, shares earn a maintain ranking.
Moreover, the next Certain Dividend databases comprise probably the most dependable dividend growers in our funding universe:
In the event you’re on the lookout for shares with distinctive dividend traits, think about the next Certain Dividend databases:
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