Caterpillar Inc. (NYSE:CAT) announced that its board of directors have approved a 1.3% increase in quarterly dividend to 78 cents per share after a hiatus of two years.
The move reflects the company’s balance sheet strength and improved cost structure which has once again enabled it to deliver incremental returns to shareholders.
The increased dividend will be paid on Aug 19, 2017, to shareholders of record as of Jul 20, 2017. The last dividend hike had come in Jun 2015, when it was hiked by 10% from 70 cents to 77 cents. Starting from 1990, Caterpillar had been hiking its dividend every summer, starting with quarterly payout due in July.
During the recession Caterpillar had refrained from hiking dividends and resumed its trend of increasing dividend in Jun 2010. Caterpillar once again was forced to maintain its dividend in the last two years as it bore the brunt of a weak mining sector.
Nevertheless, the company has consistently paid a cash dividend every year since it was formed and paid a quarterly dividend since 1933. Over the span of 10 years, its cash dividend has grown from the payout of 30 cents per share to the current payout of 78 cents.
Caterpillar, Inc. Price
Another factor working in favor of Caterpillar is its endeavours to reduce costs in the wake of weak demand. In Sep 2015, Caterpillar set upon significant restructuring and cost reduction initiative, with actions expected through 2018.
Once fully implemented, the plan would aid lower its annual operating costs by about $1.5 billion. Going forward, Caterpillar is expected to benefit from President Trump’s plans of big spending in infrastructure as it is anticipated to play a major role in the national infrastructure plan.
Caterpillar currently sports a Zacks Rank #1 (Strong Buy).
AGCO flaunts the same rank as Caterpillar while Rockwell Automation carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AGCO has expected long-term growth of 12.11%.
Rockwell Automation has an expected long-term growth of 10.63%.
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