Updated on October 17th, 2022 by Quinn Mohammed
The Dividend Kings are a group of just 45 stocks that have increased their dividends for at least 50 years in a row. We believe the Dividend Kings are among the highest-quality dividend growth stocks to buy and hold for the long term.
With this in mind, we created a full list of all 45 Dividend Kings. You can download the full list, along with important financial metrics such as dividend yields and price-to-earnings ratios, by clicking on the link below:
Each year, we individually review all the Dividend Kings. The next in the series is MSA Safety (MSA).
MSA Safety has increased its dividend for over 50 consecutive years, including a recent 4.5% raise. This article will analyze the company in greater detail.
MSA Safety Incorporated, formerly Mine Safety Appliances, was established in 1914. Today, it develops and manufactures safety products. Customers come from a variety of industrial markets, including oil & gas, fire service, construction, mining, and the military.
Source: Investor Presentation
MSA Safety’s major products include gas and flame detection, air respirators, head protection, fall protection, air-purifying respirators, and eye protection gear.
On July 1st, 2021, MSA acquired Bacharach, Inc., a leader in gas detection technologies, for $337 million.
On July 27th, 2022, MSA released Q2 2022 results for the period ending June 30th, 2022. For the quarter, revenue came in at $372 million, a 9.0% increase compared to Q2 2021. Sales in the Americas segment were up 15.9%, while sales in the International segment declined 2.9%.
Adjusted earnings equaled $66 million or $1.29 per share compared to $59 million or $1.06 per share in Q2 2021. For the full fiscal year 2022, we expect adjusted EPS to equal about $5.20.
MSA has put together a solid growth record in the past decade, growing by an average rate of 8.5% per year from 2008 through 2019 period. Results in 2020 fell moderately, which is not unexpected given the coronavirus pandemic. However, earnings bounced back in 2021, and we anticipate further gains for 2022.
The company views its long-term outlook as healthy, which bodes well for its future growth.
Source: Investor Presentation
MSA’s acquisition of Globe Manufacturing in 2017 boosted the company’s revenue growth profile and provided the company with an expansion into new product categories, such as protective clothing for firefighters. Innovations such as the thermal imaging camera in the self-contained breathing apparatus and the company’s V-Series line of fall protection have helped as well.
In addition, the Sierra Monitor acquisition, Bristol Uniforms acquisition, Bacharach acquisition, and a strong backlog cement the idea of the possibility of continued growth. Results were down in 2020 but still resilient, falling less than -7%.
Moreover, many of MSA’s products continue to be in demand in the current environment. Over the intermediate term, we are assuming a 6% annual growth.
Competitive Advantages & Recession Performance
MSA Safety has several competitive advantages that fuel its growth as the leader across the safety and protection products industry. It has a global reach that competitors cannot match, with roughly a third of annual sales from outside the Americas, and it can invest in growth initiatives to retain its industry leadership.
To be sure, there is some cyclicality inherent in the business – safety is always important, but budgets become squeezed at lesser times. That said, investors should be encouraged that the dividend kept increasing during recessions.
Earnings-per-share performance during the Great Recession is below:
- 2007 earnings-per-share of $1.80
- 2008 earnings-per-share of $1.96 (8.9% increase)
- 2009 earnings-per-share of $1.21 (38% decline)
- 2010 earnings-per-share of $1.05 (13% increase)
That said, the company remained highly profitable during the Great Recession. This allowed it to continue increasing its dividend each year during the recession, even when earnings declined. And thanks to its strong brand portfolio, the company recovered quickly after 2010.
Valuation & Expected Returns
Using the current share price of nearly $114 and expected earnings-per-share of $5.20 for the year, MSA stock trades for a price-to-earnings ratio of 21.8. Over the past ten years, shares of MSA have traded hands with an average P/E ratio of about 23.0 times adjusted earnings. On account of the rising interest rate environment, we are using 22.0 times adjusted earnings as a starting place for a “fair” valuation.
With a current P/E ratio of 21.8 times expected earnings, this implies the possibility of a valuation tailwind over the intermediate term. Returning to our target price-to-earnings ratio by 2027 would increase annual returns by 0.1% over this period of time.
Aside from changes in the price-to-earnings multiple, future returns will be driven by earnings growth and dividends.
We expect 6% annual earnings growth over the next five years. In addition, MSA stock has a current dividend yield of 1.6%.
Total returns could consist of the following:
- 6.0% earnings growth
- 0.1% multiple expansion
- 1.6% dividend yield
MSA is expected to return 7.5% per year through 2027. As a result, we have a hold recommendation on MSA stock, though the company’s ability to raise dividends through multiple recessions is impressive.
The company has 52 consecutive years of dividend growth after increasing its dividend by 4.5% in May 2022.
MSA Safety is a strong business with competitive advantages. Moreover, the company also has a reasonable growth profile. Total return potential comes in at 7.5% per year, driven by 6% growth and a 1.6% dividend yield, with the possibility of a minor valuation tailwind. Therefore, shares earn a hold rating.
Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:
- The Dividend Aristocrats List: S&P 500 Index stocks with 25+ years of dividend increases.
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Dividend Champions: Dividend stocks with 25+ years of dividend increases, including those that may not qualify as Dividend Aristocrats.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The 20 Highest Yielding Monthly Dividend Stocks
- The Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.