A good stock for long term dividend growth

Hello there all!
Another Sunday for blog time with coffee! This week was quite busy with both office  and personal work. I had to spend quite a bit time for car repair. Last Sunday, I was driving in heavy rain and roads were kind of submerged. Suddenly I heard a hard scratch sound coming from the undercarriage. Luckily, I was just few minutes away from home so decided to drive anyway. Next morning, I went to inspect what really happened on previous night. Seems like some part of plastic and metal cover that protects the transmission system just shattered. Most probably there was a large rock or metal was hiding under water to hit my poor car 😒 So, had to call insurance, report claim and arrange towing to dealership for repair. Also, suddenly office workload increased so much that did not find much to think of anything else. Interestingly I found when I had to give sometime of day for personal work, office work just piling up  with sharp deadlines😊 LOL. Murphy’ law seems unavoidable!

Anyway, let’s dive into today’s topic on one of my favorite dividend stocks. I love to invest in solid dividend stocks for earning passive income. Usually, I reinvest the earned dividend to increase the size of that stock in my portfolio.

Emerson Electric (Ticker: EMR) is a USA multinational company in industrial hardware and software sector. This company is not a familiar household name like GE but has a solid longtime presence in industrial applications.

Here I am focusing some of the criteria I use to screen potential dividend stocks:
Dividend: Emerson increased its dividend payments for 63 years consecutively. So this stock is part of Dividend Aristocrat. Current yield is about 3.28%. which I think a impressive number. While I select dividend stock, I like to check how much of annual revenue that company uses to pay shareholder dividends, cause a high payout can limit the growth of that company. Currently, Emerson have about 50% payout which I guess not too high.

Stock price growth: This price history of Emerson since 1980 tells the story! I love how consistently it price appreciated without any major collapse or spike. As a long-term investor, I prefer this type of price appreciation trend.

P/E Ratio: While adding a dividend stock for long term growth, I try to keep the  P/E multiple at a reasonable range. I guess for sectors like industrial applications, a reasonable P/E range be anywhere between 14 to 20 from historical perspective. The most recent Emerson P/E is about is about 17.40 which is bit on the higher range. However, considering impressive dividend yield number and consistency, I take it as a solid investment for me.

Balance Sheet: From reviewing the recent balance sheet, its apparent this company does not have tons of debt like GE. Its current interest coverage is about 15% meaning annual revenue can cover the loan payments easily.
Overall this stock gave solid return on price and dividends so far. That’s all I need for long-term goal of earning passive income during my early retirement. 

  Take care folks!

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The contents in this site is solely my personal opinion and for entertainment purpose only. I am not a professional financial planner and hence no content in this site should be taken as professional financial advice.


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