Emerson Electric (EMR) will be increasing its dividend from $.40 to $.41 per quarter which marks 56 consecutive years of rising payouts. Unfortunately this dividend boost is only 2.5% and pales in comparison to what they did last year. I like to see rising dividends, but I must admit I'm disappointed by this announcement. For a stock yielding around 3.5% I expect better dividend growth. I can get the same increase from high yielding stocks such as T or SNH.
Historically EMR has periods with low dividend growth so I'm not alarmed or even surprised. Before I become a shareholder I always check a company's dividend history. Over time I anticipate Emerson to average around 7% div increases. Pre-announcement, the 5 yr average was 9.1% and the 10 year average 6.4%. It seems Emerson is just being conservative this time.
I don't own EMR, but I was also disappointed (though not surprised) by the small increase. It's been an odd year for dividend increases from industrial companies -- a mix of large and small increases -- even though many of them are subject to the same economic pressures. I agree that EMR is probably being conservative right now.
ReplyDeleteIndeed. The defense contractors had another banner year of increases. Traditional industrials like EMR & ITW were rather disappointing. Railroads were solid (I anticipate lower div growth in 2013 though). I have yet to listen to the Emerson conference call, but was extremely impressed with what Illnois Tool Works is doing.
DeleteA little disappointing. EMR has been around a long time, and they've been growing that dividend for a long time as well. So, I do give management the benefit of the doubt here. I rate conservatism and prudence highly, but I do hope us shareholders are rewarded amply next time around.
ReplyDeleteBest wishes!
I feel the same way. I'd rather have my companies be conservative than too aggressive. Stability is good!
DeleteIf they continue to grow earnings dividend growth will follow.
That is rather disappointing news. I own EMR as well, and was also hoping for a larger increase this time around. I guess you can't win em all, all the the time.
ReplyDeleteThis increase was the worst of the year based off my expectations. I wish EMR would stabilize the increases and make them more even. That said, I think we'll be okay long term and don't plan to give up on this dividend champion. A 56 year streak gives me a lot of confidence!
DeleteWhenever a company increases its annual dividend its usually a good sign of strength. I was reading the other day I cannot recall the companies name but they have increased or I should say they have paid a dividend every single year since before the turn of the century now thats a record of strong dividend performance.
ReplyDelete