Emerson Electric Co. has extended its dividend growth streak to 69 consecutive years, with its latest quarterly results showing robust cash generation that comfortably covers the payout. For the third quarter of fiscal 2026, Emerson reported sales of $4.873 billion, up 7% year over year, and adjusted EPS of $1.71, up 13%. Operating cash flow surged 34% to $1.425 billion, while free cash flow rose 36% to $1.323 billion. The company raised its full-year outlook, now expecting adjusted EPS of approximately $6.55, operating cash flow of about $4.1 billion, and free cash flow of roughly $3.6 billion. Management plans to return about $2.2 billion to shareholders, including $1.2 billion in dividends and $1 billion in buybacks. The current quarterly dividend of $0.555 per share yields about 1.41%, which is modest, but the payout ratio against adjusted earnings is only about 34%, and free cash flow covered dividends by roughly 2.8 times in the first nine months. The main concern is valuation, with the stock trading at about 34.4 times trailing earnings, though forward P/E is lower at about 21.8 times. Emerson's growth in software and test and measurement segments supports the premium valuation, making it a strong dividend-growth stock rather than a high-yield pick.
Emerson Electric CompanyStrong Q3 results, raised outlook, and robust cash flow support dividend growth and buybacks.
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