Updated on October 31st, 2024 by Felix Martinez
The Dividend Kings are a group of just 53 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 53 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). This article will analyze the company in greater detail.
Business Overview
MSA Safety Incorporated, formerly Mine Safety Appliances, was established in 1914. Today, it develops and manufactures safety products. Customers come from various 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.
Growth Prospects
MSA has put together a solid growth record in the past decade, growing earnings-per-share by an average rate of 10.6% per year from 2013 through 2022 period. Results in 2020 fell moderately, which was not unexpected given the coronavirus pandemic. However, earnings bounced back in 2021 and 2022, with 2023 results expected to reach a new high.
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 allowed it to expand 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 also helped.
In addition, the Sierra Monitor acquisition, Bristol Uniforms acquisition, Bacharach acquisition, and strong backlog cement the possibility of continued growth. Results were down in 2020 but still resilient, falling less than -7%.
Moreover, many of MSA’s products are in demand in the current environment. Over the intermediate term, we assume a 7% annual growth, slightly below the company’s long-term growth rate.
Competitive Advantages & Recession Performance
MSA Safety has several competitive advantages fueling its growth as the safety and protection products industry leader. 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 keeps 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 yearly 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 $166 and expected earnings-per-share of $7.80 for the year, MSA stock trades for a price-to-earnings ratio of 21.3. Over the past ten years, shares of MSA have traded hands with an average P/E ratio of about 22.0 times adjusted earnings. Considering the company’s quality, we feel that this is a fair valuation for the stock.
A current P/E ratio of almost 21.3 times expected earnings implies the possibility of a valuation tailwind over the intermediate term. Returning to our target price-to-earnings ratio by 2029 would increase annual returns by 0.5% over this period.
Aside from changes in the price-to-earnings multiple, future returns will be driven by earnings growth and dividends.
We expect 7% annual earnings growth over the next five years.
In addition, MSA stock has a current dividend yield of 1.2%. The company has increased its dividend for 54 consecutive years, including a 8.5% raise in May of 2024.
Total returns could consist of the following:
- 7.0% earnings growth
- 1.2% dividend yield
- 0.5% multiple expansion
MSA is expected to return 8.7% per year through 2029. As a result, we recommend holding MSA stock, though the company’s impressive ability to raise dividends through multiple recessions is a plus.
Final Thoughts
MSA Safety is a strong business with competitive advantages and a reasonable growth profile. Its total return potential is almost 8.7% per year, driven by 7% growth and a 1.2% dividend yield.
Therefore, MSA 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 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 Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.