July 02, 2025 a 07:31 am
EMR: Dividend Analysis - Emerson Electric Co.
Emerson Electric Co. presents a fundamentally solid investment profile, particularly notable for its impressive dividend history and respectable growth trajectory. With over half a century of consistent dividend payouts, the company underscores a strong commitment to shareholder returns. The moderate dividend yield is bolstered by sound growth figures, indicating a stable, if not stellar, performance. However, potential investors should consider the payout ratios closely, as they play a critical role in assessing the sustainability of dividend payments.
📊 Overview
Emerson Electric Co. thrives within the industrial sector, balancing traditional strength with timely innovation. The company yields a 1.75% dividend, hinting at a conservative payout yet reflecting its commitment to steady returns. With a current dividend per share of $2.10 and a remarkable 54-year history of dividend payments, Emerson stands as a reliable dividend stock. Its last dividend cut is unheard of in recent memory, highlighting robust stability.
| Metric | Value |
|---|---|
| Sector | Industrial |
| Dividend Yield | 1.75 % |
| Current Dividend Per Share | 2.10 USD |
| Dividend History | 54 years |
| Last Cut or Suspension | None |
📉 Dividend History
The sustained history of dividend increments underscores Emerson Electric's commitment to delivering shareholder value. This historical data serves as a testament to its operational stability and strong financial health over decades. An understanding of this pattern is crucial for assessing future dividend reliability.
| Year | Dividend Per Share (USD) |
|---|---|
| 2025 | 1.055 |
| 2024 | 2.1025 |
| 2023 | 2.085 |
| 2022 | 2.065 |
| 2021 | 2.030 |
📈 Dividend Growth
Emerson's dividend growth demonstrates both resilience and incremental improvement, which are pivotal for investors focusing on income expansion alongside capital appreciation. Over three years, the dividend growth rate was a modest 1.18%, broadening slightly over five years to 1.31%, indicating a steady, albeit slow, pace of increase.
| Time | Growth |
|---|---|
| 3 years | 1.18 % |
| 5 years | 1.31 % |
The average dividend growth is 1.31% over 5 years. This shows moderate but steady dividend growth.
✅ Payout Ratio
The payout ratio reveals how much of the company's earnings are distributed as dividends. With an EPS-based payout ratio of 49.42% and a free cash flow-based ratio of 42.81%, the figures suggest a secure and sustainable dividend policy. These ratios illustrate prudent financial management, enabling both reinvestment in business operations and shareholder returns.
| Key Figure | Ratio |
|---|---|
| EPS-based | 49.42 % |
| Free cash flow-based | 42.81 % |
The payout ratios are well-managed with EPS coverage allowing for ample reinvestment opportunities while maintaining shareholder satisfaction.
✅ Cashflow & Capital Efficiency
The evaluation of cash flow metrics showcases Emerson's financial resilience and capacity for capital investment. Critical indices such as Free Cash Flow Yield and Earnings Yield remain solid, fostering optimistic capital efficiency. Review of metrics like CAPEX to Operating Cash Flow and Stock-based Compensation to Revenue indicates lucrative, yet conservative growth tactics.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 4.66 % | 0.49 % | 5.51 % |
| Earnings Yield | 3.15 % | 23.84 % | 7.44 % |
| CAPEX to Operating Cash Flow | 12.58 % | 56.99 % | 18.17 % |
| Stock-based Compensation to Revenue | 1.49 % | 1.65 % | 0.64 % |
| Free Cash Flow / Operating Cash Flow Ratio | 87.42 % | 43.01 % | 81.83 % |
Emerson Electric's capital efficiency indices suggest competitive operational leverage, reflecting robust financial management and investor attractiveness.
⚠️ Balance Sheet & Leverage Analysis
Understanding leverage and balance sheet strength is crucial in gauging financial risk and sustainability. Emerson Electric presents modest leverage ratios and encouraging liquidity metrics, ensuring sufficient debt coverage.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 0.379 | 0.394 | 1.001 |
| Debt-to-Assets | 0.185 | 0.191 | 0.291 |
| Debt-to-Capital | 0.275 | 0.283 | 0.500 |
| Net Debt to EBITDA | 1.143 | 0.026 | 2.447 |
| Current Ratio | 1.775 | 2.746 | 1.094 |
| Quick Ratio | 1.395 | 2.348 | 0.812 |
| Financial Leverage | 2.045 | 2.066 | 3.442 |
The consistent management of debt confirms Emerson's ability to navigate economic cycles while maintaining fiscal discipline.
🗣️ Fundamental Strength & Profitability
Profitability metrics such as Return on Equity (ROE), Return on Assets (ROA), and margins guided by EBITDA, EBIT, and Net Income are critical for long-term viability analysis. Emerson Electric's sound profitability ratios and an impressive margin trajectory spotlight its operational prowess.
| Metric | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 9.10 % | 63.89 % | 31.18 % |
| Return on Assets | 4.45 % | 30.92 % | 9.06 % |
| Net Profit Margin | 11.25 % | 87.17 % | 16.46 % |
| EBIT Margin | 13.39 % | 19.70 % | 13.55 % |
| EBITDA Margin | 23.05 % | 26.63 % | 17.84 % |
| Gross Margin | 50.79 % | 48.97 % | 41.71 % |
| Research & Development to Revenue | 4.46 % | 3.45 % | 1.96 % |
Such profitability metrics affirm Emerson's capability to generate consistent earnings and its potential for scalable growth.
🗣️ Price Development
✅ Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 4 | |
| Dividend growth | 3 | |
| Payout ratio | 4 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow coverage | 4 | |
| Balance sheet quality | 4 |
Total Score: 31/40
✅ Rating
Emerson Electric's investment appeal is robust, with a stable dividend profile underpinned by a well-managed balance sheet and prudent capital investments. The stock presents an attractive option for income-seeking investors prioritizing long-term stability over high yields. While the growth pace is moderate, the consistency of returns and fiscal prudence render Emerson a compelling choice within its sector. Recommended for conservative investors with a focus on sustained income and capital preservation.