November 19, 2025 a 03:31 pm
CAT: Dividend Analysis - Caterpillar Inc.
Caterpillar Inc., a leader in the construction and machinery sector, presents a stable and promising dividend profile. The company's consistent dividend growth and robust financial metrics make it an attractive option for dividend investors. Their solid market position and historical commitment to shareholder returns suggest a reliable dividend outlook.
📊 Overview
The following table provides an at-a-glance overview of Caterpillar Inc.'s dividend-related metrics, illustrating the company's commitment to shareholder returns within its sector.
| Metric | Value |
|---|---|
| Sector | Construction & Machinery |
| Dividend Yield | 1.10 % |
| Current Dividend per Share | 5.44 USD |
| Dividend History | 44 years |
| Last Cut or Suspension | 2013 |
📈 Dividend History
Caterpillar's long-standing dividend history underscores its commitment to returning capital to shareholders. A 44-year streak of consistent dividends, with the last cut occurring in 2013, highlights reliability. This consistency is important for income-focused investors seeking predictability.
| Year | Dividend per Share (USD) |
|---|---|
| 2025 | 5.84 |
| 2024 | 5.42 |
| 2023 | 5.00 |
| 2022 | 4.62 |
| 2021 | 4.28 |
📈 Dividend Growth
Growth in dividends indicates the potential for increasing shareholder value over time. Caterpillar has demonstrated moderate dividend growth over recent years, which is a promising sign for potential investors seeking both income and growth.
| 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
Payout ratios are critical indicators of a dividend's sustainability. An EPS-based ratio of 27.50 % and an FCF-based ratio of 26.86 % suggest Caterpillar's dividends are well-covered, leaving room for potential growth without compromising financial health.
| Key Figure | Ratio |
|---|---|
| EPS-based | 27.50 % |
| Free Cash Flow-based | 26.86 % |
The current payout ratios indicate a well-managed dividend strategy with ample coverage from earnings and cash flow.
💸 Cashflow & Capital Efficiency
Cashflow and capital efficiency metrics provide insight into a company's ability to sustain dividends. Free cash flow and earnings yields reveal liquidity, while CAPEX efficiency inform reinvestment strategies. These are crucial for assessing long-term sustainability and profitability.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Free Cash Flow Yield | 4.09 % | 6.49 % | 5.00 % |
| Earnings Yield | 5.31 % | 6.85 % | 6.11 % |
| CAPEX/Operating Cash Flow | 33.47 % | 23.99 % | 26.71 % |
| Stock-based Comp./Revenue | - | 0 % | 0 % |
| Free Cash Flow / Operating Cash Flow | 66.53 % | 76.00 % | 73.29 % |
The review of Caterpillar's cashflow shows robust free cash flow yield and supportive earnings, signifying financial stability with efficient capital usage and reinvestment strategies.
📊 Balance Sheet & Leverage Analysis
Analyzing leverage metrics gives an understanding of financial risk and capitalization. High debt levels relative to equity and assets can imply increased risk, potentially impacting dividend policy in downturns.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Debt-to-Equity | 2.33 | 1.94 | 1.97 |
| Debt-to-Assets | 0.45 | 0.43 | 0.44 |
| Debt-to-Capital | 0.70 | 0.66 | 0.66 |
| Net Debt to EBITDA | 2.63 | 1.97 | 1.97 |
| Current Ratio | 1.39 | 1.35 | 1.42 |
Caterpillar's balance sheet reflects moderate to high leverage; however, stability in liquidity ratios and adequate interest coverage cushion potential financial stress.
🗣️ Fundamental Strength & Profitability
Profitability metrics such as ROE, ROA, and margins are indicative of a company's efficiency and ability to generate returns on shareholder investments. They are crucial for evaluating overall financial health and potential for future growth.
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Return on Equity | 42.25 % | 53.02 % | 55.37 % |
| Return on Assets | 8.18 % | 11.81 % | 12.30 % |
| Net Margin | 11.28 % | 15.41 % | 16.65 % |
| EBIT Margin | 15.47 % | 20.22 % | 21.42 % |
With robust profitability metrics, Caterpillar showcases strong operational performance and capacity for consistent returns to shareholders.
📈 Price Development
✅ Dividend Scoring System
This scoring evaluates Caterpillar's dividend profile using key criteria to understand its overall dividend strength and reliability.
| Criterion | Score | Score Bar |
|---|---|---|
| Dividend Yield | 3 | |
| Dividend Stability | 5 | |
| Dividend Growth | 4 | |
| Payout Ratio | 5 | |
| Financial Stability | 4 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 4 | |
| Balance Sheet Quality | 4 |
Overall Score: 34/40
🗣️ Rating
Caterpillar Inc. is highly rated for its strong dividend profile, characterized by steady growth, stability, and comprehensive financial coverage. The company's financial health supports a reliable dividend strategy, making it a wise choice for dividend-centric investors seeking consistent returns.