Dividend Stock to Double Up On Right Now
Here's a dividend paying stock that should continue to pay its shareholders.
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Intro
💡 Invest in companies you believe in - W. Buffett
In times of market volatility, dividend stocks offer investors a sense of stability and a steady income stream. Companies with a long history of paying and increasing dividends often demonstrate disciplined capital management, helping them navigate economic challenges more effectively. One such company is Caterpillar (NYSE: CAT)—the world's largest construction equipment manufacturer—which has been paying dividends for over 90 years.
History of the Company
Caterpillar Inc. has a rich history that dates back to the early 20th century. The company was formed in 1925 through the merger of two pioneering tractor manufacturers—Holt Manufacturing Company and C. L. Best Tractor Co. Their innovative designs laid the foundation for Caterpillar’s dominance in the construction and mining equipment industry.
Headquartered in Deerfield, Illinois, Caterpillar has since grown into a global powerhouse, operating in more than 180 countries and employing over 109,000 people. Over the decades, the company has expanded its portfolio to include not only heavy machinery but also diesel and natural gas engines, industrial gas turbines, and financial services.
Its commitment to innovation and sustainability has positioned it as an industry leader for nearly a century.
A Proven Dividend Eagle
Caterpillar (NYSE: CAT), the world’s largest construction equipment manufacturer, has been a reliable dividend-paying stock for 92 consecutive years. Not only has the company consistently paid dividends, but it has also raised them annually for the past 31 years. Currently, Caterpillar offers a quarterly dividend of $1.41 per share, translating to an annual yield of 1.66% with a payout ratio of 24.5%.
🦅 Dividend Eagles
An updated compilation of 100+ top-performing dividend stocks with 15+ years of consecutive dividend increases, selected based on MaxDividends’ strict criteria.
Companies featured on the Dividend Eagles list have a proven track record of regular and increasing dividend payouts. This ensures you receive a reliable income, whether you're planning for retirement or seeking additional cash flow.
The Dividend Eagles list offers precisely that—a gateway to financial growth and stability.
Beyond dividends, these companies often exhibit strong fundamentals and growth prospects. Investing in them not only provides income but also the opportunity for your investment to grow over time.
This is how we build our own growing passive income and long-term wealth.
Commitment to Shareholders
In addition to dividends, Caterpillar actively repurchases its shares. Over the past three years, the company has reduced its outstanding shares by 10.4%, further enhancing shareholder value.
Management has reaffirmed its commitment to using "substantially all" of its machinery, energy, and transportation (ME&T) free cash flow for shareholder returns. In 2024 alone, Caterpillar generated $9.4 billion in ME&T free cash flow but returned an impressive $10.3 billion through dividends and share buybacks.
Business Performance and Outlook
Caterpillar’s sales experienced a slight dip in 2024, totaling $64.8 billion compared to $67.1 billion in 2023. Management attributed this decline to lower sales volume, a natural fluctuation in industries like oil and gas. Looking ahead to 2025, Caterpillar expects another slight sales decline but anticipates ME&T free cash flow to remain at the upper end of its $5 billion to $10 billion range.
Key Institutional Investors in Caterpillar (CAT)
Institutional investors hold a significant stake in Caterpillar Inc., reflecting confidence in the company’s long-term growth and financial stability. As of Q4 2023, the three largest institutional shareholders are:
Vanguard Group Inc. – Holding 8.7% of Caterpillar’s shares, Vanguard is the company's largest investor. With a strong focus on long-term value, Vanguard’s investment highlights Caterpillar’s appeal to passive index funds and ETFs.
BlackRock Inc. – Owning 7.4% of Caterpillar, BlackRock is another major institutional investor. As one of the world’s largest asset managers, BlackRock’s stake reflects its belief in Caterpillar’s consistent profitability and dividend reliability.
State Street Corporation – With 5.2% ownership, State Street plays a key role in institutional ownership. The firm specializes in managing large-scale index funds, reinforcing Caterpillar’s position as a stable and attractive investment.
Caterpillar Inc (NYSE: CAT)
Financial Score: 97 / 99 ⭐️⭐️⭐️⭐️⭐️+
Industry: Farm & Heavy Construction Machinery
Dividend Increase - 31 Years
👉 Learn more about Financial Score
Caterpillar Inc. is a leading global manufacturer of construction and mining equipment, diesel and gas engines, industrial turbines, and diesel-electric locomotives. The company develops and supplies machinery for construction, mining, energy, and transportation industries, while also providing financial and insurance services. Founded in 1925, its headquarters are located in Irving, Texas.
Caterpillar - Quick MaxDividends Team Overview
🟢 According to the latest reports, the company is currently showing financial profit.
🟢 The company's sales have been growing for a long time and there is positive momentum
🟢 Growing operating profit over recent years is a good indicator of the effective management of the company in recent years.
🟢 The dynamics of earnings per share are positive, the company shows good pace and stability in terms of profitability
🟢 Business is quite stable and developing. Reports indicate that the company is basically generating income, although sometimes there are drawdownsFinancial Statement
If you want to stay on top of your portfolio's health, don't forget to check in on the financials of the companies you've invested in. The better shape they’re in, the better your results will be. Keep an eye on their quarterly and annual reports to see how they're performing.
Here is a quick dive into Caterpillar over last years
The strongest and most stable companies tend to have a Financial Score of 80+, with the very best ones hitting 90+. If you see that score start to dip below 80, that’s your cue to consider jumping ship before things get worse.
👉 Learn More about Financial Score
Our Paid Members get access to a curated watchlist of 19,000 companies worldwide, all scored by our team on a regular basis. Companies like Caterpillar are on that list, too.
Future Growth Prospects for Caterpillar Inc.
Caterpillar Inc. (CAT) has strong future growth prospects driven by market expansion, technological advancements, and sustainability initiatives. The company is targeting key regions, including Asia-Pacific, Latin America, and the Middle East, with projected annual growth rates of 7.2%, 5.8%, and 6.5%, respectively. Strategic investments include $450 million for digital transformation, a 12% increase in R&D spending, and $280 million for sustainable product development.
Revenue is expected to grow steadily, reaching $65.9 billion by 2026. With a global manufacturing presence in 27 countries, 3,200 active patents, and a diverse product portfolio, Caterpillar strengthens its competitive edge. Additionally, planned strategic partnerships worth $1.2 billion will further drive innovation and market expansion.
Recent Caterpillar Financial Performance (2023)
With MaxDividends, it's easier than ever to access top dividend companies, track your results, and explore new dividend ideas.
The MaxDividends Top Stocks List features ~100 of the most reliable dividend companies in the U.S. market, each with 15+ years of consecutive dividend increases. These stocks are carefully selected based on MaxDividends' strict criteria for consistency and reliability.
Dividend Kings represent the elite tier of dividend growth stocks. With 50+ years of consecutive dividend increases, these companies offer unparalleled income stability, making them a top choice for investors seeking long-term reliability in an unpredictable market.
With 25+ years of consecutive dividend increases, Dividend Aristocrats are among the strongest dividend growth stocks. These companies have a proven track record of not only maintaining but consistently increasing their dividends, often outperforming the broader market over time.
Why Invest in Caterpillar Inc?
Caterpillar Inc. (NYSE: CAT) stands out as a strong investment due to its consistent dividend history, shareholder-friendly capital allocation, and long-term growth potential. The company has paid dividends for 92 consecutive years and increased them annually for the past 31 years. With a quarterly dividend of $1.41 per share (1.66% yield) and a low payout ratio of 24.5%, Caterpillar offers a reliable income stream for investors.
Beyond dividends, Caterpillar actively repurchases shares, reducing its outstanding shares by 10.4% over the past three years. In 2024, the company generated $9.4 billion in free cash flow from its machinery, energy, and transportation (ME&T) segment but returned $10.3 billion to shareholders through dividends and buybacks, reinforcing its commitment to investor returns.
Despite a slight dip in sales from $67.1 billion in 2023 to $64.8 billion in 2024, management remains optimistic, expecting ME&T free cash flow to stay at the upper end of its $5 billion to $10 billion range. While potential risks, such as tariffs and fluctuating demand, exist, Caterpillar’s strong domestic manufacturing presence and global export capabilities provide resilience.
With a price-to-free cash flow ratio at a three-year low of 19.3, Caterpillar may currently be undervalued. Its combination of steady dividend growth, disciplined financial management, and long-term strategic positioning makes it an attractive choice for both income and value investors.
Interesting Fact
Caterpillar Inc. played a crucial role in World War II. Its bulldozers were widely used by the Allies for building roads, airfields, and clearing debris after battles. Caterpillar equipment was instrumental in the D-Day landings, rapidly constructing temporary roads on the beaches, which helped speed up the Allied advance into Europe.
Competitors
1. Illinois Tool Works Inc (NYSE: ITW)
Financial Score: 99 / 99
Industry: Specialty Industrial Machinery
Illinois Tool Works Inc. (ITW) is an American industrial company founded in 1912 and headquartered in Glenview, Illinois.
It manufactures and sells specialized equipment and components for various industries, including automotive, food equipment, measurement and welding equipment, construction materials, polymers, and fluids.
The company has a strong market position, stable profit growth, and high profitability.
2. Deere & Company (NYSE: DE)
Financial Score: 97 / 99
Industry: Farm & Heavy Construction Machinery
Deere & Company is a global manufacturer of agricultural, construction, and forestry equipment, operating through four key segments: Production and Precision Agriculture, Small Agriculture and Turf, Construction and Forestry, and Financial Services.
The company produces a wide range of machinery, including tractors, combines, sprayers, loaders, excavators, and utility vehicles, as well as precision agriculture solutions and outdoor power products.
Deere also provides financing, leasing, and warranty services. Founded in 1837, the company is headquartered in Moline, Illinois.
Final Thoughts: Should You Buy Caterpillar?
Caterpillar remains a compelling option for dividend-focused investors. With a long-standing history of dividend growth, disciplined capital allocation, and a shareholder-friendly approach, the stock presents an attractive long-term investment. While short-term sales fluctuations exist, Caterpillar’s commitment to returning capital to shareholders makes it a solid choice for income-focused portfolios.
Current Market Value
Undervalued \ Overvalued \ Fairly Valued
Compare the P/E ratios of competitor companies to assess whether the stock you're considering is overvalued. We calculate the average P/E among competitors as a benchmark.
If a company's current P/E is 20% or more below the competitor average, it is considered undervalued.
If it is 20% or more above, it is considered overvalued.
The P/E ratio is calculated by dividing the market value per share by earnings per share (EPS).
⚪️ Fairy Valued
Compared to competitors and companies with business in this industry, the company is fairly valued. A price reduction of 15-20% would be a great investment point.
Analysts Consensus
Caterpillar Inc. has received a mix of analyst recommendations, with a notable portion favoring "Hold" and "Buy" ratings. The consensus reflects steady investor sentiment, indicating confidence in the company's long-term performance.
The price targets suggest a potential upside, with the average forecast exceeding the current price. Analysts recognize Caterpillar's market position but maintain a cautious stance due to economic factors affecting industrial equipment demand.
The company demonstrates strong financial performance, stability, and dividend growth. Despite minor declines in quarterly revenue, Caterpillar remains a reliable long-term investment.
Max's Comments
In this review, we've selected competitors, and I recommend paying attention to them as well. These are strong, excellent businesses that are also a great fit for our dividend goals. All three companies in this review look stable, and each could be a solid standalone investment. I like all three—especially Illinois Tools.
To your wealth, MaxDividends Team
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