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:
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!