Emerson Electric (NYSE:EMR) Has Affirmed Its Dividend Of $0.5275

The board of Emerson Electric Co. (NYSE:EMR) has announced that it will pay a dividend on the 10th of September, with investors receiving $0.5275 per share. The dividend yield is 1.6% based on this payment, which is a little bit low compared to the other companies in the industry.

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Emerson Electric's Projected Earnings Seem Likely To Cover Future Distributions

Even a low dividend yield can be attractive if it is sustained for years on end. The last dividend was quite easily covered by Emerson Electric's earnings. This indicates that a lot of the earnings are being reinvested into the business, with the aim of fueling growth.

Over the next year, EPS is forecast to expand by 60.1%. If the dividend continues on this path, the payout ratio could be 34% by next year, which we think can be pretty sustainable going forward.

View our latest analysis for Emerson Electric

Emerson Electric Has A Solid Track Record

The company has an extended history of paying stable dividends. Since 2015, the annual payment back then was $1.88, compared to the most recent full-year payment of $2.11. This means that it has been growing its distributions at 1.2% per annum over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

Dividend Growth May Be Hard To Achieve

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. However, Emerson Electric has only grown its earnings per share at 4.0% per annum over the past five years. Growth of 4.0% may indicate that the company has limited investment opportunity so it is returning its earnings to shareholders instead. This isn't necessarily bad, but we wouldn't expect rapid dividend growth in the future.

We Really Like Emerson Electric's Dividend

In summary, it is good to see that the dividend is staying consistent, and we don't think there is any reason to suspect this might change over the medium term. The company is easily earning enough to cover its dividend payments and it is great to see that these earnings are being translated into cash flow. Taking this all into consideration, this looks like it could be a good dividend opportunity.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. However, there are other things to consider for investors when analysing stock performance. As an example, we've identified 2 warning signs for Emerson Electric that you should be aware of before investing. Is Emerson Electric not quite the opportunity you were looking for? Why not check out our selection of top dividend stocks.

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