2024-04-06 10:33:02 ET
Summary
- NSSC is an industry leader in security products and has a long-term track record of increasing its revenue and profitability.
- The company is becoming more mature and started paying dividends last year due to excess cash.
- NSSC has the potential to be a well-performing dividend growth stock because of its excellent financials, good growth prospects and a pristine balance sheet.
- Based on discounted cash flow analysis, shares are trading around fair value at the moment.
- A highly competitive landscape formed by larger companies poses the greatest risk for this small cap and should certainly be taken into account before investing in NSSC.
Introduction
Dividend growth investing is a style that really suits me as a person. I also like to have a mix of different dividend growth stocks. My portfolio consists of companies that are more stable and where the dividend is growing steadily, but I am also interested in companies with high dividend growth potential. Since I am in my early thirties, I can afford to buy quality companies with a relatively low dividend yield but with the potential to grow into dividend monsters.
With this in mind I came across the company named Napco Security Technologies, Inc. ( NSSC ). The company has been around for a long time and has achieved a huge outperformance compared to the S&P 500 index.
And if we took a longer time frame the difference in performance is even bigger. Last year, the company has initiated a dividend and has increased it several times, the last time it was actually 25%! Does that mean that less growth can be expected? I don't think so. The company appears to be becoming more and more mature and initiating dividend payments certainly does not have to have an impact on the long-term stock performance....
Read the full article on Seeking Alpha
For further details see:
Napco: This Company Has Excellent Dividend Growth Potential