April 17, 2025 a 02:46 am
📊 Dividend Analysis - Deere & Company
Deere & Company, recognized for its iconic brand, leads the way in agricultural machinery and solutions. With a solid dividend history and a commitment to sustained shareholder returns, it offers a promising investment with moderate yield and robust growth potential. However, fluctuating payout ratios and leverage deserve close attention.
Overview
Deere & Company operates within the industrial sector, renowned for its significant role in mechanizing agricultural production. The company offers a modest dividend yield of 1.32%, reflecting a current dividend payout of approximately $5.82 per share. Impressively, Deere boasts 54 consecutive years of dividend payments with no recent cuts or suspensions, highlighting a commitment to stability and shareholder trust.
| Metric | Details |
|---|---|
| Sector | Industrial |
| Dividend Yield | 1.32% |
| Current Dividend Per Share | 5.82 USD |
| Dividend History | 54 years |
| Last Cut or Suspension | None |
Dividend History
Understanding a company's dividend history allows investors to gauge its commitment to shareholder value and financial health. Deere & Company's consistent ability to pay dividends over decades demonstrates resilience and a strong position within its industry.
| Year | Dividend Per Share |
|---|---|
| 2025 | 1.62 USD |
| 2024 | 6.03 USD |
| 2023 | 5.32 USD |
| 2022 | 4.51 USD |
| 2021 | 3.90 USD |
Dividend Growth
Examining dividend growth offers insight into a company’s future prospects. Deere has demonstrated a moderate, steady increase, suggesting a deliberate strategy to increase shareholder returns without compromising financial stability.
| Time | Growth |
|---|---|
| 3 years | 15.63% |
| 5 years | 14.68% |
The average dividend growth is 14.68% over 5 years. This shows moderate but steady dividend growth.
Payout Ratio
Payout ratios provide a view on how sustainable the dividend payments are relative to company earnings and cash flow. Deere's payout ratio reveals prudent distribution, maintaining a balance between rewarding shareholders and reinvesting for growth.
| Key Figure | Ratio |
|---|---|
| EPS-based | 25.4% |
| Free cash flow-based | 37.31% |
With an EPS payout ratio of 25.4% and a free cash flow payout ratio of 37.31%, Deere appears to maintain a conservative payout strategy, ensuring a cushion for future dividends and maintaining financial flexibility.
Cashflow & Capital Efficiency
Evaluating cash flow and capital efficiency aids in assessing the firm’s operational effectiveness and its ability to sustain and grow shareholder returns.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Free Cash Flow Yield | 3.89% | 3.83% | 0.76% |
| Earnings Yield | 6.24% | 9.46% | 5.92% |
| CAPEX to Operating Cash Flow | 52.02% | 52.02% | 80.61% |
| Stock-based Compensation to Revenue | 0.41% | 0.22% | 0.17% |
| Free Cash Flow / Operating Cash Flow Ratio | 47.98% | 47.98% | 19.39% |
Despite strong earnings yield, varying free cash flow yields and increased CAPEX highlight periodic constraints in capital efficiency but reflect proactive investments for future growth.
Balance Sheet & Leverage Analysis
The balance sheet and leverage ratios offer insights into the company's financial health, risk exposure, and capacity for ongoing operations and strategic growth endeavors.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Debt-to-Equity | 2.87 | 2.92 | 2.56 |
| Debt-to-Assets | 0.61 | 0.61 | 0.58 |
| Debt-to-Capital | 0.74 | 0.75 | 0.72 |
| Net Debt to EBITDA | 3.96 | 3.22 | 3.90 |
| Current Ratio | 2.03 | 1.26 | 1.98 |
| Quick Ratio | 1.84 | 1.07 | 1.72 |
| Financial Leverage | 4.70 | 4.78 | 4.44 |
Deere's high debt-to-equity and leverage ratios indicate significant reliance on debt, which can amplify growth but also enhances risk if not managed prudently.
Fundamental Strength & Profitability
Profitability and fundamental metrics portray the company’s overall ability to generate returns and value, guiding long-term investment decisions.
| Year | 2024 | 2023 | 2022 |
|---|---|---|---|
| Return on Equity | 31.09% | 46.67% | 35.19% |
| Return on Assets | 6.62% | 9.77% | 7.92% |
| Margins: Net | 14.05% | 16.87% | 13.91% |
| EBIT | 24.85% | 25.68% | 19.87% |
| EBITDA | 29.04% | 29.01% | 23.56% |
| Gross | 38.59% | 37.02% | 30.67% |
| Research & Development to Revenue | 4.53% | 3.61% | 3.73% |
With robust margins and impressive equity returns, Deere & Company underscores its operational strength, though continued investment in R&D remains crucial for sustaining innovation.
Price Development
Dividend Scoring System
| Category | Score | Score Bar |
|---|---|---|
| Dividend Yield | 3 | |
| Dividend Stability | 5 | |
| Dividend Growth | 4 | |
| Payout Ratio | 4 | |
| Financial Stability | 3 | |
| Dividend Continuity | 5 | |
| Cashflow Coverage | 3 | |
| Balance Sheet Quality | 3 |
Total Score: 30/40
Rating
Deere & Company demonstrates a remarkable dividend track record supported by solid financial metrics and strategic growth, meriting a positive attention from dividend-focused investors. However, attention should be given to maintaining efficient debt management and cash flow strategies for sustained future performance.