MSC Industrial Direct Raised The Dividend 19% And The Forward Yield Is Over 4%

This article was first published July 15, 2019 on Seeking Alpha.

In this article, I write about MSC Industrial Direct Co., Inc. (MSM), another potential stock suitable for a dividend growth investor. MSC Industrial is not that well-known especially compared to its larger competitors like Fastenal Company (FAST) and W.W. Grainger, Inc. (GWW) due to their dividend track record and consistency in returning cash to shareholders. But saying that, MSC Industrial recently raised the dividend 19% and the forward dividend yield is now over 4%. This yield is much greater than the company’s competitors. Furthermore, the current stock price of ~$69.55 has declined over 10% YTD. The stock price is also down significantly from its peak of ~$106 in early 2017 due to tariffs, trade wars, and a slowdown in worldwide industrial activity. Based on expected 2019 EPS, MSC Industrial is undervalued relative to its 10-year P/E multiple. Hence, I view this stock as a buy for patient investors.

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One comment

  1. […] MSC Industrial Direct Co, Inc. (MSM) is one of the largest industrial distributors. The company focuses on metalworking and maintenance, repair and operations (MRO) products in the U.S., Canada and the U.K. The company offers over 1.65 million products through its distribution centers and branches. The company also provides inventory management and metalworking services. MSC Industrial Direct raised its dividend 19% to $0.75 per share per quarter. The forward yield is ~4.2% and the payout ratio is ~50%. This is the 16thstraight dividend increase. The stock is undervalued trading at a P/E ratio of ~13.1 below its 5-year average of 17.3. The company is also trading below the S&P 500’s P/E average of ~22.4. The company is growing top and bottom lines. From 2009 to 2018 the company has grown revenue from $1.49B to $3.20B. During that time diluted EPS has grown from $1.99 to $5.80 supporting dividend growth. I believe that the stock is undervalued at the current P/E multiple. You can read my analysis of MSM. […]

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