Emerson Electric (NYSE:EMR) Has Announced A Dividend Of $0.52

Emerson Electric Co.'s (NYSE:EMR) investors are due to receive a payment of $0.52 per share on 11th of September. Based on this payment, the dividend yield will be 2.2%, which is fairly typical for the industry.

View our latest analysis for Emerson Electric

Emerson Electric's Dividend Is Well Covered By Earnings

We aren't too impressed by dividend yields unless they can be sustained over time. However, prior to this announcement, Emerson Electric's dividend was comfortably covered by both cash flow and earnings. As a result, a large proportion of what it earned was being reinvested back into the business.

EPS is set to fall by 7.1% over the next 12 months. If the dividend continues along the path it has been on recently, we estimate the payout ratio could be 41%, which is comfortable for the company to continue in the future.

Emerson Electric Has A Solid Track Record

The company has a sustained record of paying dividends with very little fluctuation. The dividend has gone from an annual total of $1.60 in 2013 to the most recent total annual payment of $2.08. This works out to be a compound annual growth rate (CAGR) of approximately 2.7% a year over that time. Although we can't deny that the dividend has been remarkably stable in the past, the growth has been pretty muted.

The Dividend Looks Likely To Grow

Investors who have held shares in the company for the past few years will be happy with the dividend income they have received. Emerson Electric has impressed us by growing EPS at 11% per year over the past five years. With a decent amount of growth and a low payout ratio, we think this bodes well for Emerson Electric's prospects of growing its dividend payments in the future.

Emerson Electric Looks Like A Great Dividend Stock

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 distributions are easily covered by earnings, and there is plenty of cash being generated as well. If earnings do fall over the next 12 months, the dividend could be buffeted a little bit, but we don't think it should cause too much of a problem in the long term. All in all, this checks a lot of the boxes we look for when choosing an income stock.

Market movements attest to how highly valued a consistent dividend policy is compared to one which is more unpredictable. At the same time, there are other factors our readers should be conscious of before pouring capital into a stock. For example, we've identified 2 warning signs for Emerson Electric (1 is a bit concerning!) 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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