Updated on July 8th, 2025 by Felix Martinez
The Dividend Kings comprise companies that have increased their dividends for at least 50 consecutive years. Over the decades, many of the companies have become huge multinational corporations, but not all of them.
You can see the full list of all 55 Dividend Kings here.
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Emerson Electric (EMR) has raised its dividend for 68 consecutive years, one of the longest dividend growth streaks in the investing universe. Only four companies have longer dividend growth streaks than Emerson.
The company has achieved an exceptional dividend growth record thanks to its strong business model, decent resilience to downturns, and somewhat conservative payout ratio, which provides a margin of safety during recessions.
In this article, we’ll review Emerson’s prospects as an investment today.
Business Overview
Emerson Electric was founded in Missouri in 1890. Since then, it has evolved from a regional manufacturer of electric motors and fans into a technology and engineering company that provides solutions to industrial, commercial, and individual customers.
It is a global leader with a presence in over 150 countries, operating in two segments: Automation Solutions and Commercial & Residential Solutions.
The Automation Solutions segment generates ~65% of the total revenue. It offers industrial equipment and software to the oil and gas industry, as well as refining, power generation, and other related industries.
The Commercial & Residential Solutions segment, which generates the remaining 35% of the total revenue, offers residential and commercial heating and air conditioning products.
Emerson generates the majority of its revenue from the oil and gas industry. This industry is infamous for the dramatic swings in commodity prices, so Emerson is highly sensitive to industry cycles.
This helps explain the 34% decrease in Emerson’s earnings per share from 2014 to 2016, which coincided with the fierce downturn in the energy sector caused by the collapse of oil and gas prices during that period.
Emerson faced another downturn in 2020 due to the coronavirus crisis. The pandemic led to a significant decline in global demand for industrial products this year, resulting in a significant downturn in the energy sector.
Source: Investor Presentation
Growth Prospects
Emerson has pursued growth by expanding its customer base and acquiring many companies. The company regularly acquires and divests parts of its business to create an optimal portfolio mix.
Source: Investor Presentation
The Aspentech transaction is huge for Emerson, and gives the acquirer access to Aspentech’s double-digit annual earnings growth. In addition, Emerson divested its Therm-O-Disc business and sold its Russia business following that country’s invasion of Ukraine.
On the other hand, it is critical to note that Emerson achieved only marginal earnings-per-share growth from 2011 to 2020. This is a reminder of Emerson’s dependence on the highly cyclical oil and gas industry. This exposure can bring extraordinary returns during booming years but also erase many years of growth during a severe downturn. Emerson is trying to diversify away from this, which has driven many portfolio actions in recent years. We believe this diversification is critical to Emerson’s future success.
Thanks to its recent acquisitions and modest organic growth, we expect Emerson to grow its earnings per share at a 9.0% average annual rate over the next five years. This growth will be comprised partly of revenue growth but also share repurchases.
Competitive Advantages & Recession Performance
Emerson has served its customers for several decades, building great expertise in the markets it serves. In addition, thanks to its large scale and dominant global presence, it has an excellent reputation. This provides the company with a significant competitive advantage.
On the other hand, due to its reliance on industrial and commercial customers, Emerson is vulnerable to recessions and downturns in the energy sector. In the Great Recession, its earnings per share were as follows:
- 2007 earnings-per-share of $2.66
- 2008 earnings-per-share of $3.11 (17% increase)
- 2009 earnings-per-share of $2.27 (27% decline)
- 2010 earnings-per-share of $2.60 (15% increase)
- 2011 earnings-per-share of $3.24 (25% increase)
Emerson survived the Great Recession with just one year of declining earnings per share, which is undoubtedly impressive.
Emerson was more heavily affected by the downturn in the energy sector, which was caused by the collapse of oil prices from $100 in mid-2014 to $26 in early 2016. Its earnings per share decreased 34%, from $3.75 in 2014 to $2.46 in 2016, and only eclipsed that level for the first time in 2021.
Given its sensitivity to economic cycles, it is impressive that Emerson has grown its dividend for 67 consecutive years. The exceptional dividend record can be attributed to the company’s decent resilience during downturns.
Another reason is the conservative payout ratio, which is expected to be approximately 35% for this year. This provides a material margin of safety for the dividend during economic downturns.
Valuation & Expected Returns
Based on the expected adjusted EPS of $5.95 for fiscal 2025, Emerson is currently trading at just 23.3 times its expected EPS. This earnings multiple is much higher than our estimate of fair value at 20 times earnings. That implies a weak ~-3% annual return from a higher valuation should it reach 20 times earnings again.
With 8% expected annual earnings-per-share growth, a 1.5% dividend yield, and a -3% annualized contraction of the price-to-earnings ratio, we expect Emerson stock to generate a 6.5% average annual return over the next five years.
Final Thoughts
Emerson has an impressive dividend growth record, particularly given its heavy reliance on industrial and commercial customers, who struggle during recessions or downturns in the energy sector. The stock’s strong dividend yield and reliable dividend growth make it suitable for some income-oriented investors.
We see the stock as overvalued today, but with renewed growth and a strong earnings base. The 6.5%+ projected annual returns are not sufficient to warrant a buy rating for Emerson. Thus, we rate the stock as a hold at the current price level.
The following articles contain stocks with very long dividend or corporate histories, ripe for selection for dividend growth investors:
- The High Yield Dividend Aristocrats List is comprised of the 20 Dividend Aristocrats with the highest current yields.
- The Dividend Achievers List is comprised of ~400 stocks with 10+ years of consecutive dividend increases.
- The High Yield Dividend Kings List is comprised of the 20 Dividend Kings with the highest current yields.
- The Blue Chip Stocks List: stocks that qualify as Dividend Achievers, Dividend Aristocrats, and/or Dividend Kings
- The High Dividend Stocks List: stocks that appeal to investors interested in the highest yields of 5% or more.
- The Monthly Dividend Stocks List: stocks that pay dividends every month, for 12 dividend payments per year.
- The Dividend Champions List: stocks that have increased their dividends for 25+ consecutive years.
Note: Not all Dividend Champions are Dividend Aristocrats because Dividend Aristocrats have additional requirements like being in The S&P 500. - The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Best DRIP Stocks: The top 15 Dividend Aristocrats with no-fee dividend reinvestment plans.
- The High ROIC Stocks List: The top 10 stocks with high returns on invested capital.
- The High Beta Stocks List: The 100 stocks in the S&P 500 Index with the highest beta.
- The Low Beta Stocks List: The 100 stocks in the S&P 500 Index with the lowest beta
- The Complete List of Russell 2000 Stocks
- The Complete List of NASDAQ-100 Stocks