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Monthly Stock Special

The $25 Special is *Emerson Electric Co. (EMR). (You must log-in as a subscriber to get this price. The non-subscirber reduced-price is $50.)

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Here is a capsule review of our featured stock, provided by Mario Medina.

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Company Information:

Emerson Electric was established in 1890 in St. Louis, Missouri as Emerson Electric Manufacturing Co. The company manages five business segments: process management, industrial automation, network power, climate technologies, and tools and storage. Its primary products include motors, drives, actuators, valves, switches, test equipment, air conditioning compressors, electric tools and home storage solutions. Emerson’s best-known brands include RIGID tools, ClosetMaid organizers, and InSinkErator garbage disposals. Its current total market capitalization of $43.8 billion makes EMR a large capitalization stock (a large-cap stock has a market capitalization value of more than $10 billion) and its long history of consistent earnings growth and dividend payments makes it a solid company. It is considered a solid and well-diversified business with a wide economic moat and sustainable competitive advantage over its rivals, which enjoys a solid corporate culture

According to Yahoo! Finance, consensus estimates call for the company to earn about $3.63 per share this year, and to go to about $4.02 per share on 2021. Emerson has paid dividends to investors since 1947, and has increased its payments for 63 consecutive years, which makes it a dividend aristocrat (the dividend aristocrats are companies within the S&P 500® index that have raised their dividends for at least 25 consecutive years). During the past five years it has increased its dividends at an average rate of 2.31%, with its quarterly payment of 50 cents currently providing a yield of 2.71%.

The value of dividends reinvestment: A hypothetical investment in EMR has grown cumulatively (including dividends reinvested) 6,137.01% during the past forty years. The same investment has grown only 2,388.99% during the same period of time, excluding dividends. According to data and calculations of the financial website, a periodic monthly investment of $100 in EMR for the past 40 years would has grown to $1,804,827, including dividends reinvested.

The stock exhibits a healthy Dividend Payout Ratio (DPR is the proportion of earnings paid out as dividends to shareholders) of 53%, which means the company is paying out only 53% of all its net income in dividends, and is retaining some percentage of its earnings to reinvest or grow the business. Its current Price to Earnings ratio (P/E --a measure of valuation) of 19.31 is 14% below the US Market Index. The forward P/E ratio is 19.61. According to Morningstar, the stock is trading 3.2% below its Fair Value Estimate, making it attractive for investors with a long-term investment horizon.

Technically (from the chart’s perspective) EMR also looks attractive, trading 10.1% below its record high, while it is forming a price consolidation pattern between $56 and $78 approximately, in which $56 is acting as a technical support level. The actively managed mutual funds American Funds Income Fund of America and American Funds Fundamental Investor are major shareholders of EMR, holding 1.5% and 0.8% of its shares respectively. The stock is also one of the 63 holdings of the mutual fund managed by Moneypaper Advisors, the MP 63 Fund (DRIPX). Emerson’s main competitors are Honeywell International Inc. (HON) and Rockwell Automation Inc. (ROK). Volatility and risks: EMR’s five-year Beta (a measure of the volatility, or systematic risk in comparison to the market as a whole as evidenced by the S&P 500® Index) is 1.38, so the stock is 38% more volatile than the Market.

Best and worst years during the past 40 years: Its best year was 1991, in which EMR returned, excluding dividends, 45.7%. On the flip side, its worst year was 2008, when the stock declined 35.39%, excluding dividends. EMR’s dividend reinvestment plan charges no fees for cash investing, dividend reinvestment, safekeeping, automatic investment or termination of the plan. With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who wish to build a holding over the long term.

Disclosure: Mario Medina is a long-term investor in Emerson Electric Co. (EMR), and his investment strategy consists on investing small amounts periodically (also known as dollar-cost average or DCA), with a long-term view. The author is the co-manager of the MP 63 Fund (DRIPX), which also holds a position in the company. The author wrote the article himself and it expresses his own opinions. The author has no business relationship with EMR and this article is not intended as a recommendation to invest as the information published does not take into account any subscriber's personal finances, goals or risk tolerance. Accordingly, you should be aware of all the risks associated with any financial investment and should consult an independent financial advisor for any personal investment advice.

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Mario Medina Personal and Professional background:

Born in Cuba and graduated in Architecture from the University of Havana, Mario Medina is editor and writer of the weekly online investment newsletter El Boletín, and senior analyst for Julie Stav, Inc. Through seminars and conferences live and online, DVDs, investment e-books, articles in his blog and financial columns (on, and, videos and Podcasts, Mario teaches people inside and outside the United States. The point that differentiates Mario in his teachings, is the simplicity and softness of the language, teaching beginners, the same way he wanted to be educated when starting in the world of personal finances and investments.

Mario provides investment guidance in financial segments of Hispanic television and radio, and has had his own radio shows on those topics at Univision Radio Network, also participating in Tu Dinero, Julie Stav’s financial shows and Podcast series ( and

Analyzing the status of the market and its indexes, examining leading companies, sectors and industries, and evaluating the performance of Julie Stav’s Platinum List of Companies, his popular online Daily Market Report allows thousands of people from across the country to follow the situation of the financial world and get the essential information they need to make the best decisions about their own investments.

Today, Mario provides independent fundamental and technical analysis for the mutual fund MoneyPaper 63 (DRIPX), which is the only fund that focuses solely in companies that offer small investors Dividend Re-investment Plans. He is also a regular contributor to

Today, those who read the articles written by Mario Medina, or those who daily follow his Market Report, listen to his segments, watch his videos, or attend his seminars, could not imagine that a little over a decade ago its author knew nothing about investments or the stock market. It has been a long, arduous road for the young man newly arrived to the US with empty pockets, a suitcase full of dreams, and whose first savings came from collecting empty soda cans and recycling scrap yard. After discovering the world of finance through books and radio programs, and after years of study and sacrifice, Mario Medina now advises thousands of Hispanics on how and when to buy or sell in the stock market in order to obtain the best returns and minimize their losses.

What was the secret that allowed Mario to develop those early, small investments? "I think the key is to save and invest on a regular basis, with clearly defined long-term, diversified goals," he says. "To do so, each person must determine his o her risk tolerance level ... I do not feel comfortable risking as much as other people, and in turn many risk more than me. It is essential to know how far one can get without trying to beat the stock market every day.”

Through his regular segments, articles and analysis, Mario wants to offer everyone his successful strategies so that anyone can make the most of their work, their savings and their investments, and realize their dreams of economic prosperity. Mario Medina’s own dream is to help those interested in managing their money by knowing the risks and investing directly in the very best, teaching them the necessary steps to succeed in the stock market and other investments, participating in it directly and without brokers, so they can manage their money more efficiently and get better returns without paying more fees.

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