Emerson Electric
Already we have our first 2012 Dividend Machine in Emerson Electric (EMR). Emerson has stellar fundamentals. It trades today at about $47.80.
Covered Call on a dividend machine:
In addition, to being a company that I want to own over time, EMR has some good call options. For instance, you can sell a call with a $52.50 strike price that expires in March, 2012 and receive a premium of $.60. If your stock is taken by the call buyer you will receive $52.50 for the stock and $.60 for the call for a total income (not including dividends) of $53.10. Subtract your cost basis of $47.80 from $53.10 and your gain is $5.30 per share. Divide $5.30 by your cost basis of $47.80 and your net gain is 11.09 percent.
If your call expires, you are left with a fundamentally sound company that pays a very nice dividend and increases your income every year.
EMR Dividend Machine Fundamentals
EMR sports a dividend of $1.60 which is a yield of 3.35% based on the closing price of $47.80. Earnings of $3.27 exceed the dividend and have increased every year for 55 years. D/E (debt to equity ratio) is very reasonable at .50.
Income investors, this is the way to invest. Use Dividend Machines to create income two ways.
Very Truly Yours,
TheMoneyMadam
