Tuesday, January 3, 2012

Emerson Electric, EMR First 2012 Dividend Machine

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,