We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CAT returned $10.3B to shareholders in 2024 and $4.3B more in Q1 2025 via dividends and buybacks.
Caterpillar (CAT - Free Report) has reaffirmed its long-standing commitment to shareholder returns with the recently announced 7% hike in quarterly dividend to $1.51 per share. This marks the 31st consecutive year of dividend increases, underscoring its resilience even amid near-term headwinds.
The annualized dividend of $6.04 implies a yield of 1.69%, which outpaces the manufacturing - construction and mining industry’s 1.58%, the sector’s 1.47% and the S&P 500’s 1.24%. CAT’s payout ratio of 26.91% is also higher than the industry’s 23.61%.
This announcement comes at a critical juncture for Caterpillar, following a weaker-than-expected first-quarter 2025 performance, with both revenues and earnings declining due to softer volumes. The company's guidance for "slightly lower" full-year revenues (factoring in tariffs) had raised doubts about a dividend hike this year. Nonetheless, the increase signals management’s confidence in its long-term cash-generating capacity.
Notably, Caterpillar has paid a cash dividend every year since it was formed and has paid a quarterly dividend since 1933. CAT has been a member of the S&P 500 Dividend Aristocrats Index since 2019.
Over the past five years, Caterpillar’s dividend has grown at a rate of around 8%, supported by a near doubling of its free cash flow. In 2024, the company returned around $10.3 billion to shareholders as dividends and share repurchases, and another $4.3 billion in the first quarter of 2025. Caterpillar has a dividend/free cash flow ratio of 0.31.
It has set a target to continue to return substantially all Machinery, Energy & Transportation (ME&T) free cash flow to shareholders over time through dividends and share repurchases.
Caterpillar’s recent dividend hike bolsters investor confidence in its long-term growth outlook. Supported by continued technological innovation and an anticipated rebound in end-market demand, the company remains well-positioned to generate steady cash flows and drive sustainable growth, even as it contends with short-term headwinds like tariffs and broader economic pressures.
A Look at Some Other Dividend-Paying Industrial Stocks
Illinois Tool Works Inc. (ITW - Free Report) , a multi-industrial manufacturing leader, is also a member of the S&P 500 Dividend Aristocrats Index. It has an impressive dividend growth streak of 61 years. In August 2024, Illinois Tool Works raised its dividend by 7% to the current quarterly payout of $1.50. The company generally raises the dividend in August and to maintain its position in the Index, another rate hike is likely on the cards. Illinois Tool Works has a five-year dividend growth of 7.1% and a current yield of 2.48%.
Illinois Tool Works has a payout ratio of 59%. In 2024, Illinois Tool Works returned $3.2 billion of surplus capital to shareholders through dividends and share repurchases and $0.8 billion in the first quarter of 2025. ITW has a dividend/free cash flow ratio of 0.19. Going forward, the company continues to target a payout ratio of around 50% of free cash flow.
Deere & Company (DE - Free Report) , which produces equipment for agriculture, construction, forestry and turf care, has a current dividend yield of 1.27%.
Although Deere paused increases in 2020, it has raised dividends six times since 2021. The last hike, of 10% to $1.62 per share, was announced in December 2024. Deere has a payout ratio of 31.3% and a five-year dividend growth of 18.2%.
Deere returned more than $5.6 billion to shareholders via dividends and share buybacks in fiscal 2024 and $1.68 billion so far in fiscal 2025. Deere’s dividend/free cash flow ratio stands at 18.9%.
CAT’s Price Performance, Valuation & Estimates
CAT shares have lost 1.6% so far this year against the industry’s 1.1% growth. In comparison, the Zacks Industrial Products sector has moved down 2.2%. The S&P 500 has gained 1.5% in the same time frame.
Image Source: Zacks Investment Research
Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 18.04X compared with the industry average of 19.86X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CAT’s 2025 earnings indicates a year-over-year decline of 14.6%. The consensus mark for revenues implies a drop of 2.4% for the year. The earnings estimates for 2026 indicate 12.8% growth, with revenues rising 4.6%.
Earnings estimates for Caterpillar for both 2025 and 2026 have moved down over the past 60 days.
Image Source: Zacks Investment Research
Caterpillar stock currently carries a Zacks Rank #3 (Hold).
Image: Bigstock
Will CAT's Dividend Hike Revive Investor Confidence in Uncertain Times?
Key Takeaways
Caterpillar (CAT - Free Report) has reaffirmed its long-standing commitment to shareholder returns with the recently announced 7% hike in quarterly dividend to $1.51 per share. This marks the 31st consecutive year of dividend increases, underscoring its resilience even amid near-term headwinds.
The annualized dividend of $6.04 implies a yield of 1.69%, which outpaces the manufacturing - construction and mining industry’s 1.58%, the sector’s 1.47% and the S&P 500’s 1.24%. CAT’s payout ratio of 26.91% is also higher than the industry’s 23.61%.
This announcement comes at a critical juncture for Caterpillar, following a weaker-than-expected first-quarter 2025 performance, with both revenues and earnings declining due to softer volumes. The company's guidance for "slightly lower" full-year revenues (factoring in tariffs) had raised doubts about a dividend hike this year. Nonetheless, the increase signals management’s confidence in its long-term cash-generating capacity.
Notably, Caterpillar has paid a cash dividend every year since it was formed and has paid a quarterly dividend since 1933. CAT has been a member of the S&P 500 Dividend Aristocrats Index since 2019.
Over the past five years, Caterpillar’s dividend has grown at a rate of around 8%, supported by a near doubling of its free cash flow. In 2024, the company returned around $10.3 billion to shareholders as dividends and share repurchases, and another $4.3 billion in the first quarter of 2025. Caterpillar has a dividend/free cash flow ratio of 0.31.
It has set a target to continue to return substantially all Machinery, Energy & Transportation (ME&T) free cash flow to shareholders over time through dividends and share repurchases.
Caterpillar’s recent dividend hike bolsters investor confidence in its long-term growth outlook. Supported by continued technological innovation and an anticipated rebound in end-market demand, the company remains well-positioned to generate steady cash flows and drive sustainable growth, even as it contends with short-term headwinds like tariffs and broader economic pressures.
A Look at Some Other Dividend-Paying Industrial Stocks
Illinois Tool Works Inc. (ITW - Free Report) , a multi-industrial manufacturing leader, is also a member of the S&P 500 Dividend Aristocrats Index. It has an impressive dividend growth streak of 61 years. In August 2024, Illinois Tool Works raised its dividend by 7% to the current quarterly payout of $1.50. The company generally raises the dividend in August and to maintain its position in the Index, another rate hike is likely on the cards.
Illinois Tool Works has a five-year dividend growth of 7.1% and a current yield of 2.48%.
Illinois Tool Works has a payout ratio of 59%. In 2024, Illinois Tool Works returned $3.2 billion of surplus capital to shareholders through dividends and share repurchases and $0.8 billion in the first quarter of 2025. ITW has a dividend/free cash flow ratio of 0.19. Going forward, the company continues to target a payout ratio of around 50% of free cash flow.
Deere & Company (DE - Free Report) , which produces equipment for agriculture, construction, forestry and turf care, has a current dividend yield of 1.27%.
Although Deere paused increases in 2020, it has raised dividends six times since 2021. The last hike, of 10% to $1.62 per share, was announced in December 2024. Deere has a payout ratio of 31.3% and a five-year dividend growth of 18.2%.
Deere returned more than $5.6 billion to shareholders via dividends and share buybacks in fiscal 2024 and $1.68 billion so far in fiscal 2025. Deere’s dividend/free cash flow ratio stands at 18.9%.
CAT’s Price Performance, Valuation & Estimates
CAT shares have lost 1.6% so far this year against the industry’s 1.1% growth. In comparison, the Zacks Industrial Products sector has moved down 2.2%. The S&P 500 has gained 1.5% in the same time frame.
Image Source: Zacks Investment Research
Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 18.04X compared with the industry average of 19.86X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CAT’s 2025 earnings indicates a year-over-year decline of 14.6%. The consensus mark for revenues implies a drop of 2.4% for the year. The earnings estimates for 2026 indicate 12.8% growth, with revenues rising 4.6%.
Earnings estimates for Caterpillar for both 2025 and 2026 have moved down over the past 60 days.
Image Source: Zacks Investment Research
Caterpillar stock currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.