EMR

Dividend Growth Portfolio Holding Emerson Hikes Dividend!

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We always love to share good news with respect to holdings in our Dividend Growth portfolio, and today gave us an opportunity. Not only did diversified industrial firm Emerson (EMR) register record operating cash flow of $3.65 billion and robust free cash flow of $3 billion during its fiscal 2013 (ending September) when it reported fiscal fourth-quarter results today–both above original expectations (shown in image below)–but the board also upped the firm’s quarterly dividend 5%, to $0.43 per quarter ($1.72 per share annualized). Image Source: Emerson, February 2013 Fiscal 2013 marked the 57th consecutive year the firm has increased dividends, and while the 5% dividend increase may not be something to write home about, significantly better-than-expected cash-flow performance suggests to … Read more

Keeping Some Dry Powder

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A young cowboy named Billy Joe grew restless on the farm A boy filled with wonderlust who really meant no harm He changed his clothes and shined his boots And combed his dark hair down And his mother cried as he walked out Don’t take your guns to town son Leave your guns at home Bill Don’t take your guns to town — Johnny Cash “Don’t Take Your Guns to Town” << What does it mean to have “dry powder”? Valuentum pursues a standard quarterly report update cycle, and our latest update of companies in the Electrical Equipment industry was quite informative. This group includes many companies that operate within the heart of the industrial economy but fall short of … Read more

Demand Remains Modest at Emerson Electric

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Dividend Growth Newsletter portfolio holding Emerson Electric (click ticker for report: ) posted August order growth that revealed moderate, but growing demand for the firm’s various products. Order Growth Remains Positive Source: EMR 8-K* As one can see from the above chart, business in August was roughly in-line with that of the previous two months, though ‘Industrial Automation’ turned positive while ‘Process Management’ decelerated slightly. Regardless, we think Emerson’s order growth is symptomatic of the broader US economy—investment in capital goods is modest but investment is still growing. Of note, European demand in the firm’s ‘Process Management’ and ‘Climate Technologies’ segments is strong, suggesting the long-awaited bottom in the Eurozone economy may be surfacing. Little else stood out from the … Read more

Emerson’s Cash Flow Remains Strong

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Dividend Growth Newsletter portfolio holding Emerson Electric (click ticker for report: ) posted another slow quarter Tuesday morning. Revenue declined 2% year-over-year to $6.3 billion in its third quarter (ended June), slightly below consensus expectations. Earnings per share, adjusted for one-time charges, declined 7% year-over-year to $0.97. Although headline results were relatively weak, free cash flow increased 20% year-over-year to $850 million, equal to 13% of total revenue. On the positive side, Emerson announced it was selling 51% of its embedded computing and power business to private equity firm Platinum Equity for $300 million. The deal caused a $0.05 repatriation charge as the firm had to bring back foreign-held cash, but the big charge came from the $503 million goodwill … Read more

Results Up Marginally at Emerson Electric

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Dividend Growth Newsletter holding Emerson Electric (click ticker for report: ) posted lackluster second quarter results reflecting mixed industrial demand. Underlying revenue increased 2% year-over-year to $6 billion, modestly lower than consensus estimates. Earnings were a penny below consensus expectations, growing 4% year-over-year to $0.77 per share. However, thanks to higher net income and more favorable changes in working capital, free cash flow was 51% higher year-to-date at $916 million. Emerson has various segments, but second quarter results were driven largely by a strong performance from Process Management. Segment sales jumped 8% year-over-year from robust international demand. US revenues in the segment were actually down 1%, but oil and gas industry demand from Asia (up 14%), Latin America (up 13%), … Read more

As Anticipated, Emerson Sees Huge First Quarter Gains

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After a modest fiscal year 2012, Emerson Electric (click ticker for report: ) kicked off fiscal year 2013 with a solid first quarter. Revenue for the quarter ticked up 5% year-over-year to $5.6 billion, modestly higher than consensus estimates. Earnings per share jumped 24% year-over-year to $0.62, reflecting stronger net income and a lower share count (but it still was in line with consensus predictions). Cash flow at Emerson was fantastic, with operating cash flow increasing 66% year-over-year to $554 million, resulting in free cash flow growth of 115% year-over-year to $439 million. Though we wouldn’t expect this breakneck pace to continue through the entire year, increases in cash flow will give the firm more flexibility with respect to capital … Read more

Why the Fiscal Cliff Deal Helps Dividend Growth Investors

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After Congress finally approved a deal to thwart the fiscal cliff Tuesday night, investors throughout the US finally have a clear picture on the tax treatment of investments going forward. Assuming no deal was reached, the US income tax code would have reverted to pre-Bush tax cut era rates, which included higher marginal rates at all income levels, higher capital gains taxes, and dividends being treated as ordinary income. Assuming several tried-and-true dividend aristocrats are valued by many on a yield basis, equity prices for high-yielding and overvalued stocks could have suffered a substantial price decline as the after-tax yield would have been meaningfully reduced. We felt the repercussions of uncertainty in the portfolio of our Dividend Growth Newsletter. Shares … Read more

The Valuentum Dividend100 Publication; A Must-Have For Any Income Investor

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Dividend investors literally have thousands of income stocks to choose from. So what are they to do, and where can they go for the most trusted forward-looking opinions on dividend growth and safety? That’s the question we seek to answer with our ValuentumDividend100 publication. In this document, we showcase the top 100 high-quality, dividend growth gems within our coverage universe. Whether you’re looking to build a portfolio consisting of high-yielding, dividend-growers or simply seeking to augment it with a few income gems, the Valuentum Dividend100 is an essential resource for any income investor. We outline some of the key components of our Dividend100 publication below, and explain how you can get the most from each of one Sign Up for … Read more

A Dual Focus on Valuation and Yield Is the Best Way to Combat Changes in Future Dividend Tax Rates

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With a potential hike in the dividend tax rate just around the corner, there is no more important time than now for income investors to evaluate their existing portfolio holdings to determine whether they are well-positioned for a higher-tax environment. Assuming there are no changes to the current trajectory, the top dividend tax rate is expected to rise to 39.6% next year (up from 15% currently), and the highest-income earners will see a Medicare surtax on top of that. Evaluate All Aspects of a Dividend Investment First of all, we think those investing in high-yielders (firms) at any price (HYAAP) may be most affected by this change in tax rates. These high-yielders at any price (HYAAP) tend to be favorites of those at or near retirement, particularly given the paltry payouts on fixed … Read more

Strength in the US Lifts Cisco

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Tuesday afternoon, telecommunications and network equipment maker Cisco (click ticker for report: ) reported surprisingly strong results for its fiscal year 2013 first quarter. Net sales jumped 6% year-over-year to $11.9 billion, exceeding consensus expectations. Earnings were also better than the consensus forecast, growing 12% year-over-year to $0.48 per share on a non-GAAP basis. High-margin service revenue was a major growth driver, surging 12% year-over-year to $2.6 billion, while product revenue increased 4% year-over-year to $9.3 billion. Since margins on service revenue are greater than those of product revenue, we welcome the shift in product mix towards services. SG&A also declined 150 basis points to 32%, and R&D remained flat at 15.4% of sales. Geographically, the Americas were relatively strong, … Read more