A large part of investment returns can be generated by dividend-paying stock given their role in compounding returns over time. Over the past 10 years, MSA Safety Incorporated (NYSE:MSA) has returned an average of 3.00% per year to shareholders in terms of dividend yield. Does MSA Safety tick all the boxes of a great dividend stock? Below, I’ll take you through my analysis. View our latest analysis for MSA Safety

5 questions to ask before buying a dividend stock

If you are a dividend investor, you should always assess these five key metrics:

• Is it paying an annual yield above 75% of dividend payers?

• Has its dividend been stable over the past (i.e. no missed payments or significant payout cuts)?

• Has dividend per share risen in the past couple of years?

• Is it able to pay the current rate of dividends from its earnings?

• Will it be able to continue to payout at the current rate in the future?

How does MSA Safety fare?

The company currently pays out more than double of its earnings as a dividend, according to its trailing trailing twelve-month data, meaning that the dividend is predominantly funded by retained earnings. However, going forward, analysts expect MSA’s payout to fall into a more sustainable range of 28.49% of its earnings, which leads to a dividend yield of around 1.58%. In addition to this, EPS should increase to $4.14, meaning that the lower payout ratio does not necessarily implicate a lower dividend payment. If there’s one type of stock you want to be reliable, it’s dividend stocks and their stable income-generating ability. MSA has increased its DPS from $0.88 to $1.4 in the past 10 years. During this period it has not missed a payment, as one would expect for a company increasing its dividend. This is an impressive feat, which makes MSA a true dividend rockstar. Compared to its peers, MSA Safety produces a yield of 1.67%, which is on the low-side for Commercial Services stocks.

Next Steps:

If MSA Safety is in your portfolio for cash-generating reasons, there may be better alternatives out there. However, if you are not strictly just a dividend investor, the stock could still offer some interesting investment opportunities. Given that this is purely a dividend analysis, you should always research extensively before deciding whether or not a stock is an appropriate investment for you. I always recommend analysing the company’s fundamentals and underlying business before making an investment decision. Below, I’ve compiled three relevant factors you should look at:

• Future Outlook: What are well-informed industry analysts predicting for MSA’s future growth? Take a look at our free research report of analyst consensus for MSA’s outlook.

• Valuation: What is MSA worth today? Even if the stock is a cash cow, it’s not worth an infinite price. The intrinsic value infographic in our free research report helps visualize whether MSA is currently mispriced by the market.

• Dividend Rockstars: Are there better dividend payers with stronger fundamentals out there? Check out our free list of these great stocks here.

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.