One Raise at a Time | Emerson Electric

Concept of how dividend growth investing works, health care, real estate
Getting a pay raise while sitting on the couch?  Sign me up!  Thanks Emerson Electric for the dividend increase!
Something I love about dividend growth investing is that each month I get to hear about companies I own deciding to pay me more money in dividends.  Just for owning a small portion of said companies.  Not going and doing R&D for new products or technology.  Not selling any products.  Not managing any employees or inventory.  Not making sales calls.  All I had to do was have the foresight to invest some of my savings in excellent companies.  That's dividend growth investing at work!  I mean who doesn't like getting a raise for doing nothing?  Dividend growth investing is far from a get rich quick investment strategy, rather you need to remain focused on the long term goal to be successful.

On November 6th the Board of Directors at Emerson Electric (EMR) approved an increase to the quarterly dividend payment.  The dividend was increase from $0.485 to $0.49 per share.  That's just a 1.03% increase.  Emerson Electric is a Dividend Champion with 61 consecutive years of dividend increases.  Shares currently yield 2.98% based on the new annualized payout.

Since I own 61.804 shares of Emerson Electric in my FI Portfolio this raise increased my forward 12-month dividends by $1.24.  This is the 7th dividend increase I've received from Emerson Electric since initiating a position in July 2012.  Cumulatively, the organic dividend growth from Emerson has totaled a whopping 22.5% over that time.  According to US Inflation Calculator the cumulative rate of inflation over that same time is 10.1%.  

A full screen version of this chart can be found here.
*Annual dividends are shown until 1992.

Emerson's dividend growth has been a big disappointment as far as I'm concerned.  When I originally purchased shares I viewed Emerson as a steady as she goes dividend grower.  Dividend growth wouldn't be 10%+ per year; however, I definitely expected more than the 3.2% annual dividend growth that they've generated over the last 5 years.

I generally like to give companies time to sort out issues rather than closing the position just because dividend growth had slowed.  The small increases over the last 3 years has allowed the payout ratio to 76% to around 55% so that is a silver lining on the safety and potential for higher increases moving forward.  However, given the 3 consecutive token dividend increases I think it's time to at least re-examine Emerson and it's spot in my portfolio.

The 1-, 3-, 5- and 10-year rolling dividend growth rates since 1956 can be found in the following chart.  

A full screen version of this chart can be found here.

Wrap Up

This raise increased my forward dividends by $1.24 with me doing nothing.  That's right, absolutely nothing to contribute to their operations.  Based on my portfolio's current yield of 3.04% this raise is like I invested an extra $40 in capital.  Except that I didn't!  One of the companies I own just decided to send more cash my way.  

That's how you can eventually reach the crossover point where your dividends received exceed your expenses.  That's DIVIDEND GROWTH INVESTING AT WORK!  The beauty of the dividend growth investing strategy is that you build up your dividends through fresh capital investment as well dividend increases from the companies you own.

So far in 2018 I've received 52 dividend increases from 45 of the companies in my FI Portfolio combining to increase my forward 12-month dividends by $463.89.  

My FI Portfolio's forward-12 month dividends increased to $6,718.08.  Including my FolioFirst portfolio's forward dividends of $90.84 brings my total taxable accounts dividends to $6,808.92.  My Roth IRA's forward 12-month dividends remain at $397.36.

Do you own shares of Emerson Electric?  Emerson's dividend growth has obviously disappointed the last few years.  Do you take a wait and see approach or start looking to close the position?

Please share your thoughts below.


  1. While just a token raise I'll take it. Beats a cut, that's for sure. EMR has been with me since going the DGI route ten years ago and I'll continue to hold this name for the foreseeable future.


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