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This is Why Emerson Electric (EMR) is a Great Dividend Stock
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Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Emerson Electric in Focus
Emerson Electric (EMR - Free Report) is headquartered in St. Louis, and is in the Industrial Products sector. The stock has seen a price change of 13.66% since the start of the year. The maker of process controls systems, valves and analytical instruments is paying out a dividend of $0.51 per share at the moment, with a dividend yield of 2.26% compared to the Manufacturing - Electronics industry's yield of 0.37% and the S&P 500's yield of 1.36%.
In terms of dividend growth, the company's current annualized dividend of $2.06 is up 2% from last year. Emerson Electric has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 1.28%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Emerson Electric's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EMR expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $4.92 per share, representing a year-over-year earnings growth rate of 20%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that EMR is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).
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This is Why Emerson Electric (EMR) is a Great Dividend Stock
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.
Emerson Electric in Focus
Emerson Electric (EMR - Free Report) is headquartered in St. Louis, and is in the Industrial Products sector. The stock has seen a price change of 13.66% since the start of the year. The maker of process controls systems, valves and analytical instruments is paying out a dividend of $0.51 per share at the moment, with a dividend yield of 2.26% compared to the Manufacturing - Electronics industry's yield of 0.37% and the S&P 500's yield of 1.36%.
In terms of dividend growth, the company's current annualized dividend of $2.06 is up 2% from last year. Emerson Electric has increased its dividend 5 times on a year-over-year basis over the last 5 years for an average annual increase of 1.28%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Emerson Electric's current payout ratio is 49%, meaning it paid out 49% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EMR expects solid earnings growth. The Zacks Consensus Estimate for 2021 is $4.92 per share, representing a year-over-year earnings growth rate of 20%.
Bottom Line
Investors like dividends for a variety of different reasons, from tax advantages and decreasing overall portfolio risk to considerably improving stock investing profits. However, not all companies offer a quarterly payout.
Big, established firms that have more secure profits are often seen as the best dividend options, but it's fairly uncommon to see high-growth businesses or tech start-ups offer their stockholders a dividend. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that EMR is not only an attractive dividend play, but is also a compelling investment opportunity with a Zacks Rank of #2 (Buy).