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Why Emerson Electric (EMR) is a Great Dividend Stock Right Now
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All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Emerson Electric in Focus
Headquartered in St. Louis, Emerson Electric (EMR - Free Report) is an Industrial Products stock that has seen a price change of -1.59% so far this year. Currently paying a dividend of $0.52 per share, the company has a dividend yield of 2.19%. In comparison, the Manufacturing - Electronics industry's yield is 0.95%, while the S&P 500's yield is 1.59%.
Looking at dividend growth, the company's current annualized dividend of $2.10 is up 1% 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 1.45%. Looking ahead, future dividend growth will be dependent on earnings growth and 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 47%. This means it paid out 47% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for EMR for this fiscal year. The Zacks Consensus Estimate for 2024 is $5.29 per share, representing a year-over-year earnings growth rate of 19.14%.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, EMR is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).
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Why Emerson Electric (EMR) is a Great Dividend Stock Right Now
All investors love getting big returns from their portfolio, whether it's through stocks, bonds, ETFs, or other types of securities. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.
Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is that coveted distribution of a company's earnings paid out to shareholders, and investors often view it by its dividend yield, a metric that measures the dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.
Emerson Electric in Focus
Headquartered in St. Louis, Emerson Electric (EMR - Free Report) is an Industrial Products stock that has seen a price change of -1.59% so far this year. Currently paying a dividend of $0.52 per share, the company has a dividend yield of 2.19%. In comparison, the Manufacturing - Electronics industry's yield is 0.95%, while the S&P 500's yield is 1.59%.
Looking at dividend growth, the company's current annualized dividend of $2.10 is up 1% 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 1.45%. Looking ahead, future dividend growth will be dependent on earnings growth and 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 47%. This means it paid out 47% of its trailing 12-month EPS as dividend.
Earnings growth looks solid for EMR for this fiscal year. The Zacks Consensus Estimate for 2024 is $5.29 per share, representing a year-over-year earnings growth rate of 19.14%.
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.
High-growth firms or tech start-ups, for example, rarely provide their shareholders a dividend, while larger, more established companies that have more secure profits are often seen as the best dividend options. Income investors have to be mindful of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, EMR is a compelling investment opportunity. Not only is it a strong dividend play, but the stock currently sits at a Zacks Rank of 3 (Hold).