Tuesday, November 6, 2012

Emerson Electric Increases Dividend

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.

7 comments:

  1. 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.

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    1. Indeed. 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.

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  2. A 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.

    Best wishes!

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    1. I feel the same way. I'd rather have my companies be conservative than too aggressive. Stability is good!

      If they continue to grow earnings dividend growth will follow.

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  3. 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.

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    1. This 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!

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  4. Whenever 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.

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