Emerson Electric (EMR) is a Top Dividend Stock Right Now: Should You Buy?
Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But 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 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) is headquartered in St. Louis, and is in the Industrial Products sector. The stock has seen a price change of -0.36% since the start of the 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 0.93%, while the S&P 500's yield is 1.63%.
Looking at dividend growth, the company's current annualized dividend of $2.10 is up 1% from last year. Over the last 5 years, Emerson Electric has increased its dividend 5 times on a year-over-year basis for an average annual increase of 1.44%. 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. Right now, Emerson Electric's payout ratio is 47%, which means it paid out 47% of its trailing 12-month EPS as dividend.
Looking at this fiscal year, EMR expects solid earnings growth. The Zacks Consensus Estimate for 2023 is $5.29 per share, with earnings expected to increase 19.14% from the year ago period.
Bottom Line
From greatly improving stock investing profits and reducing overall portfolio risk to providing tax advantages, investors like dividends for a variety of different reasons. But, not every company offers 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 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 presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #1 (Strong Buy).
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Emerson Electric Co. (EMR) : Free Stock Analysis Report
