Investment Quality Trends recommends stocks based on the principle that “the underlying value of dividends, which determines yield, will in the long run also determine price.” In the chart below, you can see the newsletter’s analysis of Mine Safety Appliances (MSA). MSA’s current yield of about 3% means it is slightly undervalued at its current price around $38. If the dividend is raised, the stock’s yield will increase and so will IQTrend’s determination of its fair value (currently between $39 and $93, as you can see in the chart below, click for a larger image).
Kelley Wright, Investment Quality Trends, Mid-November 2012