Emerson Electric Company (EMR) is a diversified global manufacturing and technology company. It offers wide range of products and services in the areas of process management, climate technologies, network power, storage solutions, professional tools, appliance solutions, motor technologies, and industrial automation. It is recognized for engineering capabilities and management excellence, Emerson has more than 140,000 employees and approximately 255 manufacturing locations worldwide. The range of fair value is calculated as $28.7 to $37.4. This article was written by Dividend Tree. If you enjoyed this article, please vote for it by clicking the Buzz Up! button below.
EMR is a Dividend Aristocrat and member of Broad Dividend Achiever and has been raising dividends for last 52 years. The most recent dividend increase was in November 2008. It remains to be seen if it will increase dividends later this year. My objective here is to analyze if EMR still continues to be a good dividend growth stock and how does it rate on my scale of risk-to-dividends.
Here I am looking at trends for past 10 years of corporation’s revenue and profitability. These parameters should show consistently growth trends. The trend charts and data summary are shown in images below.
Risk Parameter Calculation
Here I use the corporation’s financial health to assign a risk number for measuring risk-to-dividends. The risk number for risk-to-dividends is 1.43. This is a low risk category as per my 3-point risk scale. The ability to maintain its margins, low payout factor, and low leverage makes it a low risk to dividends equity.
Quality of Dividends
This section measures the dividend growth rate, duration of growth, consistency over a period of past five years.
Fair Value Calculation
This section determines what price I should pay to buy a given stock.
Emerson Electric Co. was founded in 1890, based out of Missouri, and has been paying and growing dividends since last 52 years. What surprised me was EMR’s evolution, its ability to sustain margins and grow, and worldwide reach.
I like EMR’s diversified revenue stream and geographical presence. Overall, it is a US based company that will provide hedge against dollar fluctuation and proxy for foreign developed/emerging markets. It has been raising dividends for last 52 years. EMR’s end-markets are cyclic and it appears that it knows how to wither such business environments. It has a strong balance sheet and competitive market positioning. The stock’s current risk-to-dividend rating is 1.43 (low risk). The current pricing of $41.17 is tad above my buy range. I recently added new position, and would continue to add as per my allocation whenever it goes near in my buy range.
Full Disclosure: Long on EMR.
The range of fair value is calculated as $28.7 to $37.4.
This article was written by Dividend Tree. If you enjoyed this article, please vote for it by clicking the Buzz Up! button below.