Global technology, software and engineering company Emerson Electric Company (EMR) has been operating for more than a century. The stock has gained 62.7% over the past five years and 87.8% over the past year. It is currently trading 3.1% below its 52-week high of $93.38, which it hit on March 8.
EMR has paid dividends consistently each quarter for more than six decades. Over the past five years, its dividend payouts have grown at a 1.2% CAGR. The stock has a 3.01% four-year average dividend yield, and its current dividend yields 2.27%. Last month, the EMR’s Board of Directors declared a regular quarterly cash dividend of $0.505 per share of common stock, which was paid on March 10.
In addition to a steady dividend payments, we think the following factors could influence EMR’s performance in the coming months:
Diversified Portfolio
EMR operates mainly through two business platforms—Automation Solutions and Commercial & Residential Solutions. Its net sales from the commercial & residential solutions platform increased 13% year-over-year during its fiscal 2021 first quarter (ended December 31, 2020). Also, , with climate change being a major concern, the company is expected to witness increasing demand for its products and services because it is growing its alternative energy business with a focus on promoting energy efficiency. EMR also has exposure to the oil and gas industry and, hence, is expected to gain in the near term because crude oil prices are expected to rise through April 2021, according to the U.S. Energy Information Administration (EIA).
Consistent Product Innovation
On March 9, EMR forged a collaboration with IMA Active to develop new strategies and software to control the production of oral solid dose pharmaceuticals. The company introduced a complete corrosion and erosion monitoring portfolio equipped with digital capabilities on March 8.
The company also introduced its Copeland Variable Speed Reciprocating Hermetic Compressors this month. The compressors are engineered specifically to save energy and provide performance improvements in a variety of demanding commercial refrigeration applications.
Favorable Analyst Sentiment
EMR has an average broker rating of 1.62. And of 25 Wall Street analysts that have rated the stock, 14 rated it a Strong Buy or Buy. Also, the stock is expected to hit $94 in the near term, according to the Wall Street analysts, which indicates a potential upside of 6.2%.
POWR Ratings Show Promise
EMR has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight different categories. EMR has a B grade for Quality, in sync with its 41.6% trailing-12-month gross profit margin. Which is higher than the industry average 28.5%.
The stock has a B grade of B for Sentiment also, consistent with the favorable analyst sentiment.
Click here to access EMR’s ratings for Growth, Value, Momentum and Stability as well.
EMR is ranked #23 of 91 stocks in the B-rated Industrial – Equipment industry.
Click here to access several other top-rated stocks in the same industry.
Bottom Line
Amid the current market volatility, we think it wise to bet on a great dividend stock like EMR. It has grown significantly over the past years, both organically and inorganically. Furthermore, as the broader macroeconomic outlook continues to improve, this Fortune 500 company is expected to thrive due to its focus on a diverse portfolio of products and services.
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EMR shares were trading at $91.47 per share on Thursday morning, up $0.95 (+1.05%). Year-to-date, EMR has gained 14.49%, versus a 5.65% rise in the benchmark S&P 500 index during the same period.
About the Author: Manisha Chatterjee
Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst.
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