Lanny’s Recent Purchase – EMR (x3)

Well – I am sure you can read from the subject line – I was back at it again with a wonderful dividend aristocrat stock.  It’s hard to keep staying away from this stock when the market wants to keep throwing the discounts and sales in your face!  I was fortunate to have capital and make a stock purchase limit order yesterday on October 1st, 2015.  I purchased Emerson Electric (EMR) for the third time in the last 2 months!  Let’s find out why:

EMR Logo

The Stock purchase – Emerson Electric (EMR)

Well, well – I purchased this company just a few weeks ago – buying approximately 25 shares last time and doing so again this round.  Last time I made the purchase, the price was at $46.005 and (yes that is rounding) this time I placed a limit order last week that triggered on October 1st for $42.75 or 7.07% less than the purchase last time.  Let me think for a second – the first time I purchased Emerson Electric (EMR) was for $49.66, followed by a purchase at $46.005 and then at $42.75 – talk about averaging down!   Bert has to be excited, as yes – I purchased more shares into a company that he has on his stocks he is always willing to buy.  And yes Bert – I now am in the lead of buying them at the lowest cost position – are you up next or what?  I’ll get to the skinny for quick rough dividend diplomat stock screening metrics:   

1.) Dividend yield: At $42.75 with a $0.47 per quarter dividend = 4.40% dividend yield – higher than my weighted average yield, higher than competitors and higher than the S&P 500.  Cha Ching!  Also – and of course – higher than the first 2 purchases I made into Emerson (EMR)

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 13.19, 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 $3.25+ 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 $46.005 to the price I recently paid of $42.75; that was a 7.07% decline, aka, time to move back in, eh?!

EMR Stock Purchase Summary

This purchase keeps me on the path and tear as I have been 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 $1,075.70 (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 4 shares per year (up from 3 from last purchase), given that the dividend stays, at a minimum, stagnant and that I now own over 90 shares producing close to $170 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 $4,230 (cost basis) and as a dividend aristocrat stock, excited about this round position I have (closing in on 100 shares).  Excited that I am seeing upper 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

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23 thoughts on “Lanny’s Recent Purchase – EMR (x3)

  1. Hey Lanny, great purchase and your forward looking dividend/year is looking pretty sweet too, but … leave a few shares for poor Bert OK? 🙂 Cheers

    • DA,

      Thank you very much! And Bert… his punk ass is going to have to catch up — I hope he enjoys my dust honestly. Kidding, Kidding. If it wasn’t for Bert, I wouldn’t have really even thought of them as a true position in my portfolio. Looking forward to the most full dividend check from them come December $40+

      -Lanny

  2. Nice choice! I also started a very small position (20 shares) at $43.18 this week. I am happy to join you in owning part of this company. Have a great weekend!

    JT

    • JT,

      Welcome to the C L U B! $43.18 is a great initiation price – essentially almost $7.00 since my first entry point – incredible. I want more but am going to try and take a breather on them. If they go $40 or below, I’m bringing my shovel out to scoop up more. Congrats!

      -Lanny

  3. I have been eyeing on EMR after the initial position, however has has been so many buying opportunity, I deployed most of my reserved cash already. I’m not going to build more cash until the market found the bottom. I’ll invest as the cash become available at this point. This is the time. It’s not 2009 financial market collapse the economy is solid to support the energy meltdown.

    Cheers!

    • Viv,

      Thank you for the coming by. There are so many opps is difficult – good problem though eh? I agree – we are here to support the energy downturn and I think the energy companies are also here to sustain it. Not the first time, right?!

      -Lanny

  4. If I do set up my second tax-free retirement account (SIPP) then Emerson is one stock under strong consideration for all the reasons you mention above. It’s a quality stock to day the least, and if only I could buy the US stocks without being traced in the UK in my normal investing account, I’d be all over it.

  5. You sure are loading up well on EMR. Its a great company and whats not to love. The starting yield is amazing and the div growth story speaks for itself.

    Congrats on adding more to your passive income
    R2R

    • IPD,

      90 shares sounds cool, and my gut is telling me – if they drop any further, may have to get more. With reinvestment, I should be looking to add 4-5 shares alone through that method. Also, an increase is coming this quarter, as they typically raise in November. With that – I’ll be knocking down 100 shares fairly soon I’m thinking! Thanks again for coming by.

      -Lanny

  6. Great buy! Loading up EMR at this time is probably the best dividend investment one can do. There is much to like about this gem at the moment.

    – mraitn

    • Mraitn,

      Thank you thank you. This time it’s a dividend aristocrat, no troubled signs from what I can see, yielding 4.40% at time of purchase, 58+ years of dividend growth and I now have 90 shares thankfully and luckily. Damn, hard to beat, eh?

      -Lanny

  7. You don’t have to convince me of EMR’s track record and value that it’s currently selling for. It’s on my short list for an October buy along with other industrial plays like CAT and DOV. The yield is safe and EMR at well over 4% definitely deserves attention. I have it in my taxable and ROTH account and even baby DivHut owns EMR! Should give you an idea about what I think of this stock. Thanks for sharing and excited to see what your 2015 dividend income total will be.

  8. Hi guys,
    I was doing some research and cam across your site a few weeks ago and I feel like I had a conversion. I’ve been researching dividend growth stocks and made a few initial purchases. I added 30 shares of EMR on your recommendation (avg cost $44.07), 7 shares of IBM and 16 shares of CAT.
    I have a question to ask. Why do you use sharebuilder? Also I checked your spending breakdown and it seems that your food costs were a rounding error, how do you keep that down so low. I don’t earn too much right now but I finished studying for the CPA earlier this year and am hopeful of landing a job at a CPA firm in the near future. Hopefully then I can sock away money like you guys.
    Lastly do you ever sell investments and if so under what conditions. I hope I’m not being too demanding. I know you guys must be busy but I’m eager to learn whatever I can. I find you guys to be inspirational and it is rare to find a comment board that is 100% supportive.

  9. Nice work! EMR is a great company and I am looking to pick up some more of that fine company in the near future. Just hope the price stays low. It will be interesting to see what their new dividend will be in the near term. I’d love to see a 10% raise to silence all the nay-sayers but then again, I’d like to see a small 2% raise and have them buyback shares or use that money to acquire beaten down companies, but we shall see.

    ADD

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