Emerson Electric Co. (NYSE:EMR) Will Pay A US$0.5275 Dividend In Two Days

Readers hoping to buy Emerson Electric Co. (NYSE:EMR) for its dividend will need to make their move shortly, as the stock is about to trade ex-dividend. The ex-dividend date is one business day before the record date, which is the cut-off date for shareholders to be present on the company's books to be eligible for a dividend payment. The ex-dividend date is important as the process of settlement involves two full business days. So if you miss that date, you would not show up on the company's books on the record date. Meaning, you will need to purchase Emerson Electric's shares before the 14th of February to receive the dividend, which will be paid on the 10th of March.

The company's next dividend payment will be US$0.5275 per share, and in the last 12 months, the company paid a total of US$2.11 per share. Looking at the last 12 months of distributions, Emerson Electric has a trailing yield of approximately 1.7% on its current stock price of US$126.75. We love seeing companies pay a dividend, but it's also important to be sure that laying the golden eggs isn't going to kill our golden goose! As a result, readers should always check whether Emerson Electric has been able to grow its dividends, or if the dividend might be cut.

View our latest analysis for Emerson Electric

If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. Emerson Electric paid out more than half (59%) of its earnings last year, which is a regular payout ratio for most companies. Yet cash flow is typically more important than profit for assessing dividend sustainability, so we should always check if the company generated enough cash to afford its dividend. Fortunately, it paid out only 37% of its free cash flow in the past year.

It's encouraging to see that the dividend is covered by both profit and cash flow. This generally suggests the dividend is sustainable, as long as earnings don't drop precipitously.

Click here to see the company's payout ratio, plus analyst estimates of its future dividends.

Have Earnings And Dividends Been Growing?

Stocks with flat earnings can still be attractive dividend payers, but it is important to be more conservative with your approach and demand a greater margin for safety when it comes to dividend sustainability. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. It's not encouraging to see that Emerson Electric's earnings are effectively flat over the past five years. Better than seeing them fall off a cliff, for sure, but the best dividend stocks grow their earnings meaningfully over the long run.

The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the past 10 years, Emerson Electric has increased its dividend at approximately 2.1% a year on average.

To Sum It Up

Is Emerson Electric an attractive dividend stock, or better left on the shelf? The payout ratios appear reasonably conservative, which implies the dividend may be somewhat sustainable. Still, with earnings basically flat, Emerson Electric doesn't stand out from a dividend perspective. In summary, while it has some positive characteristics, we're not inclined to race out and buy Emerson Electric today.

If you want to look further into Emerson Electric, it's worth knowing the risks this business faces. Every company has risks, and we've spotted 1 warning sign for Emerson Electric you should know about.

If you're in the market for strong dividend payers, we recommend checking our selection of top dividend stocks.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.