MSC INDUSTRIAL DIRECT CO-A (NYSE:MSM) – A Dividend Stock Worth Considering

MSC INDUSTRIAL DIRECT CO-A (NYSE:MSM) was identified by our dividend stock screener as a company with strong dividend characteristics, solid profitability, and reasonable financial health. The stock offers an attractive yield while maintaining sustainable payout metrics. Below, we examine why MSM stands out for income-focused investors.

Key Dividend Strengths

• High Dividend Yield (4.30%) – MSM’s yield is well above the industry average of 2.74% and the S&P 500’s 2.40%, making it appealing for income investors.
• Reliable Track Record – The company has paid dividends for at least 10 years without cuts in the past three years, signaling commitment to shareholder returns.
• Dividend Growth (5.09%) – While not aggressive, the steady annual increase supports long-term income growth.

Profitability Supports Payouts

MSM earns a Profitability Rating of 7/10, with strengths including:

• Strong Return on Invested Capital (14.01%), outperforming 85% of industry peers.
• Healthy Gross Margin (40.90%), indicating pricing power and cost efficiency.
• Consistent Earnings & Cash Flow – Positive earnings and operating cash flow over the past five years reinforce dividend sustainability.

Financial Health Considerations

With a Health Rating of 5/10, MSM has some minor concerns but remains stable:

• Low Debt Levels – A Debt/Equity ratio of 0.22 is better than 65% of peers.
• Solid Solvency – An Altman-Z score of 4.88 suggests no near-term bankruptcy risk.
• Liquidity Concerns – A Quick Ratio of 0.88 may require monitoring, though the Current Ratio (1.92) is adequate.

Valuation & Growth Outlook

• P/E Ratio (19.97) is in line with the industry but slightly below the S&P 500 average.
• Expected EPS Growth (9.10%) suggests improving profitability ahead.

For a deeper look, review the full fundamental analysis of MSM.

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Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.