Emerson Electric (EMR) Could Be a Great Choice

Getting big returns from financial portfolios, whether through stocks, bonds, ETFs, other securities, or a combination of all, is an investor's dream. However, when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.Cash flow can come from bond interest, interest from other types of investments, and of course, dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends make up large portions of long-term returns, and in many cases, dividend contributions surpass one-third of total returns.Emerson Electric in FocusEmerson Electric (EMR) is headquartered in St. Louis, and is in the Industrial Products sector. The stock has seen a price change of -17.78% since the start of the year. The maker of process controls systems, valves and analytical instruments is currently shelling out a dividend of $0.53 per share, with a dividend yield of 2.07%. This compares to the Manufacturing - Electronics industry's yield of 0.67% and the S&P 500's yield of 1.65%.Looking at dividend growth, the company's current annualized dividend of $2.11 is up 0.5% from last year. In the past five-year period, Emerson Electric has increased its dividend 5 times on a year-over-year basis for an average annual increase of 1.23%. Any future dividend growth will depend on both earnings growth and the company's payout ratio; a payout ratio is the proportion of a firm's annual earnings per share that it pays out as a dividend. Emerson Electric's current payout ratio is 37%, meaning it paid out 37% of its trailing 12-month EPS as dividend.EMR is expecting earnings to expand this fiscal year as well. The Zacks Consensus Estimate for 2025 is $5.97 per share, with earnings expected to increase 8.74% from the year ago period.Bottom LineInvestors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. It's important to keep in mind that not all companies provide a quarterly payout.For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. That said, they can take comfort from the fact that EMR is not only an attractive dividend play, but also represents a compelling investment opportunity with a Zacks Rank of #2 (Buy).7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Emerson Electric Co. (EMR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks