Emerson Electric: A Dividend King, But Dividend Growth Has Slowed

Investment Thesis For Emerson Electric
In my recent article quantitatively screening the Dividend Kings based on my criteria, I identified four stocks that are potentially interesting for Dividend Growth Investors. One of these was Emerson Electric (EMR). The company is a long time Dividend King, having paid a growing dividend for 62 straight years, one of the few public companies with 60+ years of increased dividends.
Emerson Electric has a dividend yield over 3%, a P/E ratio below the broader market average, a fairly conservative balance sheet, and a long history of growing dividends. With that said, there are some negatives in that historical EPS growth has been choppy, the payout ratio has recently been above my threshold criteria, and dividend growth has been only about 1% for the past few years. Emerson has also overpaid for acquisitions in the past that did not work out as well as expected. I think that the current negatives outweigh the positives for this equity and furthermore, the stock is only slightly undervalued at the current stock price. Hence, I will look elsewhere for a suitable dividend growth stock.

Source: wsj.com
Overview of Emerson Electric
Emerson Electric is an industrial conglomerate that traces its history to 1890. The company has two business segments: Automations Solutions and Commercial and Residential Solutions. Automation Solutions has four product areas that are Measurement & Analytical Instrumentation, Valves, Actuators... Read more