Uncontrollable macro factors have worked against Caterpillar (CAT - Get Report) over the past three years, causing the stock to significantly underperform the market. While the business is cyclical, the company's hefty cash pile on hand, consistent free cash flow generation, and moderate payout ratios create strong cushion for the dividend and appear to offer double-digit dividend growth potential when its markets eventually rebound.
Timing the bottom of the current down cycle is impossible, but the stock's 4.4% dividend yield (higher than 73% of all other dividend stocks in the market) and reasonable forward price-to-earnings multiple of 14.5 indicate the stock's relative attractiveness for very long-term focused dividend investors. The reasons for Caterpillar's success over its 85+ years of being in business continue to hold true today with its dealer network, and the company is quickly integrating new technologies that will widen its moat. For these reasons, we believe Caterpillar offers compelling total return potential over the next few years and include the company in our Top 20 Dividend Stocks list.
Source: The Street
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Howdy,
Caterpillar is truly one fine company. I'm concidering buying in at these levels below $70. They are surely alive and kicking 50 years from now, still rising dividends.
Best regards petrusko