People often look to invest in dividend-paying stock companies for several reasons. However, the key reason might be that people get passive income by holding stock, which is especially satisfying for retirees. Dividend stocks provide a steady stream of income and the prospect for capital growth. They become more attractive when there are clear indications of a reduction in interest rates, especially following the addition of more job opportunities to the U.S. economy. These factors make dividend stocks an attractive investment option.
While the market offers a wide range of investment options, identifying affordable stocks can be challenging. However, three dividend companies stand out as compelling investments: Emerson Electric (EMR), Micron Technology (MU), and General Electric Company (GE). These three companies, all trading at under $200 per share, have a strong dividend history and are rated as "Strong Buys" by analysts. Whether you're a seasoned investor or just starting out, these three stocks offer a blend of stability and potential that could enhance your investment strategy. Additionally, these companies are worth considering for investors seeking high yields on lower-priced stocks.
#1. Emerson Electric Company (EMR)
Based in St. Louis, Emerson Electric Company (EMR) is a global manufacturing and technology company providing advanced solutions for commercial, consumer, and industrial markets. From humble beginnings, Emerson has grown steadily and has become a leader in automation solutions, climate technologies, and home equipment.
With a market capitalization of $61.7 billion, Emerson Electric shares have gained more than 28% over the past year, compared to the S&P 500 Index's ($SPX) gain of 24.1%.
Beyond lucrative returns, Emerson Electric maintains a dividend policy that has consistently rewarded investors with growing payouts over the past 28 years. The company is currently paying $2.10, on an annualized basis, with a 1.94% yield. Its strong dividend payout history reflects its durability and its bottom-line strength.
The company reported its fiscal Q2 earnings print in early May, with revenue coming in at $4.38 billion, a 16.5% increase year over year. Moreover, Emerson reported earnings per share (EPS) of $1.36, beating analysts' expectations by 11 cents. Impressively, gross profit also jumped by a healthy 26.8%.
Looking ahead, Emerson Electric is projected to grow EPS by 23.2% this fiscal year to $5.47, followed by 8.4% growth to $5.93 in fiscal 2025.
Following the earnings report, Deutsche Bank upgraded EMR to “Buy” from “Hold,” while Argus raised their price target to $130 from $115.
Overall, Wall Street analysts remain bullish on Emerson stock, giving it a consensus rating of "Strong Buy" and a mean price target of $128, indicating an 18.3% upside potential. Among the 20 analysts covering the stock, 16 rate it as a" Strong Buy," 1 assigns a "Moderate Buy," and 3 maintain a "Hold" rating.
#2. Micron Technology Inc. (MU)
Founded in 1978, Micron Technology (MU) is a global semiconductor company specializing in memory and storage solutions. The company is known for its innovation in NAND, DRAM, and NOR flash memory machineries. Additionally, it serves diverse industries, including computing, networking, automotive, and mobile devices. Micron has a huge market capitalization of about $145 billion.
With the artificial intelligence (AI) trend evolving, the memory chip business is increasing rapidly, benefiting companies like Micron. As a result, Micron's stock has risen by 102.6% in the past year, outperforming the broader market.
Micron pays its investors a quarterly dividend of 12 cents, with its annual yield of 0.35% slightly below the sector median.
Additionally, Micron has witnessed rapid growth in its latest quarterly results, with fiscal Q2 sales coming in at $58.2 billion, a 55.2% jump year-over-year. Similarly, net income rose by 142%, reaching $793 million from a negative value last year. Moreover, adjusted earnings per share came in at $0.42, beating expectations for a quarterly loss.
Looking ahead, Wall Street anticipates massive EPS growth from MU, with earnings expected to surge to $6.98 per share by fiscal 2025.
Overall, Micron stock has a consensus rating of "Strong Buy" from Wall Street analysts, with a mean price target of $136.48 and a high target of $225. Of 27 analysts covering the stock, 24 call it a "Strong Buy," 2 assign a "Moderate Buy," and 1 suggests a "Hold" rating.
#3. GE Aerospace (GE)
Based in Cincinnati, GE Aerospace (GE) is a leader in aviation technology and is known for its cutting-edge jet engines and advanced aerospace systems. Following the completion of General Electric's spin-off, announced back in 2021, into three separate entities, GE Aerospace is now an independent powerhouse in the aviation industry.
Valued at $177 billion by market capitalization, GE stock has gained over 92% in the past year, easily outpacing the S&P 500.
The company offers a quarterly dividend amount of 28 cents per share, with a dividend yield of 0.69%.
In April 2024, GE Aerospace reported its first quarter results, with earnings beating estimates by 15 cents to a reported 82 cents. Sales grew 11% year-over-year, reaching $15.2 billion. Free cash flow for the quarter surged to $850 million.
Furthermore, GE Aerospace anticipates generating $5 billion in free cash flow in 2024, potentially distributing $3.7 billion to its shareholders. Full-year operating profit is also expected to grow from $6.2 billion to $6.6 billion.
GE has received a consensus "Strong Buy" rating from analysts, with the mean price target of $185.36 reflecting a 13.2% upside potential. Out of 15 analysts covering the stock, 13 give a "Strong Buy" rating, 1 assigns a "Moderate Buy," and 1 suggests a "Hold" rating.
