It’s the middle of the month and well, you know the Dividend Diplomats have a tough time sitting on the side lines during market movements! Given that the market has been on a rollercoaster ride lately, and mostly down over the last few weeks, it was time to add more income for less and take advantage of a discounted aristocrat of a company I already owned. I was excited to round the position out even further, and thought – I think the future me will be happy for it. Let’s take a look at the recent add to my current position of Emerson Electric (EMR):
Recent Purchase – Emerson Electric (EMR)
Back in the saddle and re-upped my position in Emerson Electric! I believe everyone last time remembered me purchasing them, which surprisingly was at $49.66, talk about following my rule and scooping up more income for less, even after I performed my analysis on Procter & Gamble (PG). We all know Bert loves this company, I can’t blame him, but it is, in fact, one of his 5 stocks that he feels you can always buy. This was definitely an example of me taking advantage of the reasons being a dividend investor has benefits during this downturn -hitting essentially all 5. Let’s see the latest stats!
1.) Dividend Yield of approximately 4.08%, which is well above the S&P 500 of around 2.11% and also beats their 5 year average of 3.1% by almost 100 basis points. Just wild, obviously, yielding much higher than my first purchase (previously at 3.78%)
2.) Dividend Growth – I love this metric and their dividend growth is essentially 7% over a 5 year span, something that is phenomenal, especially coupled with an above average dividend yield. This adds quite an impact to my forward dividend growth rate for my portfolio as a whole.
3.) The P/E ratio, based on projected (updated) EPS of $3.24 was 14.20, or below the 15 that I really like to see, well below the market as a whole and is attractive amongst their competitors; and given the stock price dropped $3.00+ since last purchase, P/E was lower as well.
4.) This leads to a payout ratio of approximately 58%, below the 60% threshold we traditionally like, but above the 20% we look for, little bit of room to still grow, but could be at a slower rate.
5.) Further, I like to re-up on my position if the stock drops by 5%+ since the last time I have bought them, given no dramatic things have changed. With the price going from $49.66 to the price I recently paid of $46.005; that was a 7.36% decline, aka, time to move back in, eh?!
EMR Stock Purchase Summary
After buying more Johnson & Johnson (JNJ) earlier this month, I am hoping this purchase allows me to continue Crushing over $6,000 in projected dividend income. I can only thank Mr. Market for taking a turn on a stock I wanted to continue and build my position in. I deployed a total capital amount of $1,154 (including fees) buying 25 shares of EMR and added a cool/flat $47 to my forward looking dividend income. With the power of dividend reinvestment – the total dividend I receive now from my position of EMR should reinvest at a minimum of close to 3 shares per year, given that the dividend stays, at a minimum, stagnant and that I now own over 65 shares producing over $120 in annual income alone from EMR – thank you guys! Adding $47.00 to my annual goal breaks down to an extra, approximately, $4.00 per month that I will start to see the benefits of this specific purchase until the 4th quarter dividend (December). As I said earlier, this purchase also allows me to reach closer and closer to my goals for 2015.
I now own roughly $3,154 (cost basis) and as a dividend aristocrat stock, excited about this round position I have. Excited that I am seeing triple figures going forward in income from this beautiful company. Did anyone else pull the trigger? Making moves on the random up-day or staying on the sidelines watching the movement happen? What are you looking at? Thank you!
-Lanny
Hi Lanny,
Great purchase! I’m also looking at EMR for my next purchase. I’ve been hesitating between them and ETN. I think both are at a great price here. I’m not sure about ETN because I’m being charged some fees everytime I receive a dividend from the ADRs I currently own and I don’t like it that much. I’d like to reduce my fees as much as possible. This could be a good reason to jump on EMR 🙂
Keep up the good work!
Sim,
Thank you for the support! I think now is a great time as ever to buy EMR – they are in the $45’s now!! Looking too good to pass up. Excited for my 4th quarter dividend and a possible increase from this aristocrat.
-Lanny
I bought some EMR awhile ago. The market has pulled back. It’s the time! Having learning about the Dogs of the Dow, I feel like even though EMR is not one of the dogs, but in the long run, EMR is a great longterm stock to buy and hold.
Vivianne,
I believe they aren’t one of them, but are a great aristocrat, with great metrics, great dividend qualities, great history with a promising future!
-Lanny
The dividend growth has been very strong! I haven’t looked at EMR, but I will now. On a different note, since the fed did not raise rates, what do you think the next few months will have in store for us? I am curious of what your thoughts are there.
Thanks!
Andrew
SHM
SHM,
I think the market is still shaky honestly. Investors aren’t sure what to do and there is quite a bit of at value or overvaluation out there. As an investor, I am trying to invest consistently into large companies that are valued below their historical metrics and current ones, you know? Such as this EMR stock haha.
I’m trying to make sure I have capital ready – hence Friday’s plummet down. Most volatility I’ve ever seen and I don’t see it stopping. Be prepared!
-Lanny
Lanny,
Solid move. I like EMR, and those similar to it. They are a champion and an aristocrat, they have a proven record and they are producing quality. Enjoy that $47+ as it grows over time!
– Gremlin
Gremlin,
Thank you – trying to keep the peddle to the FLOOR that’s for sure but at the same time, want to have capital for pull backs – such as Friday! I appreciate it and they are a nice aristocrat, that’s for sure!
-Lanny
I like the purchase Lanny, EMR has been on my watch list for a long time now, I’ve just never pulled the trigger on it.