Deere & Company
While the global economy may be holding its own, it’s not red hot. Capital expenditure plans are being dialed back … particularly for heavy equipment, and particularly thanks to China’s slow-down. Caterpillar (CAT) reports that sales of construction equipment in China are only half as strong now as they were in 2011.
Fortunately Deere & Company (DE) isn’t heavily reliant on China, and leans more towards the farming machinery business than heavy construction. It’s not a completely clean break, though, and food-shortage mania isn’t getting much traction. That’s why William Blair saw fit to go ahead and downgrade DE all the way to an ‘underperform’ earlier in the week.
The current yield is 2.4%, but unlike Coach, with Deere’s net margins of only 8.5%, that payout isn’t exactly well-shielded.