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Caterpillar (CAT) Rewards Shareholders With 8% Dividend Hike
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Caterpillar Inc. (CAT - Free Report) recently hiked its quarterly dividend by 8% to $1.11 to boost shareholder value. The new dividend will take the company’s dividend yield from the current 1.76% to 1.89% — higher than the industry’s dividend yield of 1.69%.
Since 2010, Caterpillar’s quarterly dividend has grown from the payout of 42 cents per share to the current announced dividend of $1.11. The increased dividend will be paid on Aug 20, 2021, to shareholders of record on Jul 20, 2021. Caterpillar has been a consistent payer of quarterly dividends since 1933. The last dividend hike of 20% to $1.03 was announced in May 2019. Due to the uncertainty surrounding the pandemic, Caterpillar suspended share repurchases in April 2020 but maintained its dividend through the year. During its first-quarter 2021 earnings call, the company had stated that it was anticipating a dividend increase and plans to revisit its share buyback plan this year.
Caterpillar has paid higher dividends to shareholders for 27 consecutive years and is a member of the S&P 500 Dividend Aristocrat Index. The Dividend Aristocrats is currently a group of 65 companies in the S&P 500 Index that have at least 25 consecutive years of dividend increases. Industrials currently make 20.4% of the index, with names like W.W. Grainger, Inc. (GWW - Free Report) and Pentair plc (PNR - Free Report) being among the top 10 constituents by index weight.
The company has a five-year average dividend yield of 2.84%, five-year dividend growth rate of 8.5% and average payout ratio of 54%. The company outscores its close competitor Deere & Company (DE - Free Report) with a five-year average dividend yield of 1.03%, five-year dividend growth rate of 7.3% and payout ratio of 35%. After a gap of two years, Deere had hiked its quarterly dividend in February 2021 by 18% to 90 cents.
Caterpillar’s dividend hike comes as a welcome news for its shareholders. Its results last year bore the brunt of the COVID-19 pandemic, which impacted demand in its markets and led dealers to cut down inventories. However, the company delivered a turnaround performance in the first quarter of 2021 with year-over-year growth in both earnings and revenues. Also, first-quarter backlog of $16.9 billion was up $2.7 billion on a sequential basis and $2.8 billion on a year-over-year basis.
In the first quarter of 2021, Caterpillar generated ME&T robust free cash flow of $1.7 billion. It remains on track to deliver its ME&T free cash flow target of $4 billion to $8 billion for 2021. Its cash and liquidity position remains strong with the company ending first-quarter 2021 with cash and short-term investments of $11.3 billion. ME&T debt at the end of first-quarter 2021 stood at $11.05 billion. Caterpillar’s current ratio is at 1.60 and times interest earned ratio is currently at 5.1.
In 2021, its results are expected to improve, aided by strong demand in China and pickup in global manufacturing activity. The Construction Industries segment is expected to gain on strength in residential construction and recovery in non-residential construction in the United States, and robust construction demand in Brazil. The Resource Industries segment is likely to benefit from improving commodity prices. Further, the company expects a benefit of $150 million in 2021 from its restructuring actions undertaken last year. A robust liquidity position, investments in expanded offerings, and services and digital initiatives are also expected to fuel growth.
Price Performance
Over the past year, Caterpillar stock has gained 93.0% compared with the industry’s rally of 99.2%.
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Caterpillar (CAT) Rewards Shareholders With 8% Dividend Hike
Caterpillar Inc. (CAT - Free Report) recently hiked its quarterly dividend by 8% to $1.11 to boost shareholder value. The new dividend will take the company’s dividend yield from the current 1.76% to 1.89% — higher than the industry’s dividend yield of 1.69%.
Since 2010, Caterpillar’s quarterly dividend has grown from the payout of 42 cents per share to the current announced dividend of $1.11. The increased dividend will be paid on Aug 20, 2021, to shareholders of record on Jul 20, 2021. Caterpillar has been a consistent payer of quarterly dividends since 1933. The last dividend hike of 20% to $1.03 was announced in May 2019. Due to the uncertainty surrounding the pandemic, Caterpillar suspended share repurchases in April 2020 but maintained its dividend through the year. During its first-quarter 2021 earnings call, the company had stated that it was anticipating a dividend increase and plans to revisit its share buyback plan this year.
Caterpillar has paid higher dividends to shareholders for 27 consecutive years and is a member of the S&P 500 Dividend Aristocrat Index. The Dividend Aristocrats is currently a group of 65 companies in the S&P 500 Index that have at least 25 consecutive years of dividend increases. Industrials currently make 20.4% of the index, with names like W.W. Grainger, Inc. (GWW - Free Report) and Pentair plc (PNR - Free Report) being among the top 10 constituents by index weight.
The company has a five-year average dividend yield of 2.84%, five-year dividend growth rate of 8.5% and average payout ratio of 54%. The company outscores its close competitor Deere & Company (DE - Free Report) with a five-year average dividend yield of 1.03%, five-year dividend growth rate of 7.3% and payout ratio of 35%. After a gap of two years, Deere had hiked its quarterly dividend in February 2021 by 18% to 90 cents.
Caterpillar’s dividend hike comes as a welcome news for its shareholders. Its results last year bore the brunt of the COVID-19 pandemic, which impacted demand in its markets and led dealers to cut down inventories. However, the company delivered a turnaround performance in the first quarter of 2021 with year-over-year growth in both earnings and revenues. Also, first-quarter backlog of $16.9 billion was up $2.7 billion on a sequential basis and $2.8 billion on a year-over-year basis.
In the first quarter of 2021, Caterpillar generated ME&T robust free cash flow of $1.7 billion. It remains on track to deliver its ME&T free cash flow target of $4 billion to $8 billion for 2021. Its cash and liquidity position remains strong with the company ending first-quarter 2021 with cash and short-term investments of $11.3 billion. ME&T debt at the end of first-quarter 2021 stood at $11.05 billion. Caterpillar’s current ratio is at 1.60 and times interest earned ratio is currently at 5.1.
In 2021, its results are expected to improve, aided by strong demand in China and pickup in global manufacturing activity. The Construction Industries segment is expected to gain on strength in residential construction and recovery in non-residential construction in the United States, and robust construction demand in Brazil. The Resource Industries segment is likely to benefit from improving commodity prices. Further, the company expects a benefit of $150 million in 2021 from its restructuring actions undertaken last year. A robust liquidity position, investments in expanded offerings, and services and digital initiatives are also expected to fuel growth.
Price Performance
Over the past year, Caterpillar stock has gained 93.0% compared with the industry’s rally of 99.2%.
Zacks Rank
Caterpillar currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
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