September 09, 2025 a 12:47 pm
CAT: Dividend Analysis - Caterpillar Inc.
Caterpillar Inc., a leader in the manufacturing of heavy equipment, offers a robust dividend profile with consistent payments over many decades. Its current dividend yield and growth history make it a solid choice for income-focused investors, while its financial stability provides reassurance about future payouts. However, potential investors should be mindful of economic cycles affecting the industrial sector.
Overview 📊
Caterpillar operates in the Industrials sector, exhibiting a current dividend yield of 1.4%. With a consistent dividend history spanning 44 years and no recent cuts, it remains a reliable income source.
| Sector | Dividend Yield | Dividend per Share | Dividend History | Last Cut/Suspension |
|---|---|---|---|---|
| Industrials | 1.40% | $5.44 | 44 years | None |
Dividend History 📉
Caterpillar's long-standing dividend history underlines its commitment to returning value to shareholders. This track record is vital for assessing the company’s reliability in maintaining its dividend payments.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 4.33 |
| 2024 | 5.42 |
| 2023 | 5.00 |
| 2022 | 4.62 |
| 2021 | 4.28 |
Dividend Growth 📈
The growth of Caterpillar's dividend over the years is a positive indicator for its financial health and profitability. The incremental growth reflects the company's capability to share profits with shareholders while reinvesting in operations.
| Time | Growth |
|---|---|
| 3 years | 8.19% |
| 5 years | 7.47% |
The average dividend growth is 7.47% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio ✅
The payout ratio is a key indicator of dividend sustainability. A low payout ratio suggests that the company is retaining enough earnings to cover dividends comfortably.
| Key Figure | Ratio |
|---|---|
| EPS-based | 27.06% |
| Free cash flow-based | 32.91% |
With an EPS payout ratio of 27.06% and FCF payout ratio of 32.91%, Caterpillar is managing a healthy balance between rewarding shareholders and sustaining future growth.
Cashflow & Capital Efficiency 💵
Analyzing cash flow and capital efficiency measures a company's ability to generate cash and its effectiveness in utilizing it for operational and capital investments.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 4.99% | 6.49% | 4.09% |
| Earnings Yield | 6.11% | 6.85% | 5.31% |
| CAPEX to Operating Cash Flow | 26.71% | 23.99% | 33.47% |
| Stock Comp to Revenue | 0% | 0% | 0% |
| Free CF / Operating CF Ratio | 73.29% | 76.00% | 66.53% |
Caterpillar demonstrates solid cash flow stability and capital efficiency, indicative of strong operational cash generation and prudent capital allocation strategies.
Balance Sheet & Leverage Analysis 📈
A detailed examination of leverage ratios provides insight into the company's capital structure and its ability to meet long-term obligations.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 1.97 | 1.94 | 2.33 |
| Debt-to-Assets | 43.76% | 43.30% | 45.14% |
| Debt-to-Capital | 66.34% | 66.02% | 69.98% |
| Net Debt to EBITDA | 1.97 | 1.97 | 2.63 |
| Current Ratio | 1.42 | 1.35 | 1.39 |
| Quick Ratio | 0.89 | 0.87 | 0.87 |
| Financial Leverage | 4.50 | 4.49 | 5.16 |
Caterpillar's balance sheet analysis points to a leveraged capital structure but is balanced by strong liquidity and positive solvency indicators.
Fundamental Strength & Profitability 📊
Key profitability ratios highlight the company's efficiency in converting revenue into profit and its management's performance.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 55.37% | 53.02% | 42.25% |
| Return on Assets | 12.30% | 11.81% | 8.18% |
| Margins: Net | 16.65% | 15.41% | 11.28% |
| EBIT | 21.42% | 20.22% | 15.47% |
| EBITDA | 24.75% | 23.42% | 19.21% |
| Gross | 35.99% | 34.69% | 29.47% |
| R&D to Revenue | 3.25% | 3.14% | 3.05% |
Caterpillar's profitability metrics show robust performance in efficient asset utilization, high return on equity, complemented by stable profitability margins.
Price Development 📈
Dividend Scoring System (H2) 🗣️
| Criteria | Score | Score Bar |
|---|---|---|
| Dividend yield | 3 | |
| Dividend Stability | 5 | |
| Dividend growth | 4 | |
| Payout ratio | 4 | |
| Financial stability | 4 | |
| Dividend continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 4 |
Total Score: 32 out of 40
Rating (H2) 🔍
Caterpillar Inc. showcases a commendable dividend program characterized by proven stability and moderate growth. With a robust financial structure, it stands out as a reliable option for dividend-seeking investors. The company's diversified industrial operations support its strong cash flow profile, earning it a favorable recommendation for those seeking income with lower risk.