Caterpillar has one of the highest dividend yields of any firm we cover, and it is one of one of the highest paying dividend stocks available. However, its overall fundamentals are only average. And we would not consider it one of the top dividend stocks we cover.
Background
Caterpillar (CAT) is a manufacturer of construction equipment, engines (diesel and natural gas), industrial gas turbines, and diesel-electric locomotive. The company is in three segments: Resource Industries, Construction Industries, and Energy & Transportation. It also provides financing and related services through its Financial Products segment.
Caterpillar is headquartered in Peoria, Illinois; however, it has a global presence.
Stock Fundamentals
Caterpillar is in a very cyclical industry, and yet it uses a great deal of debt. Its balance sheet looks highly levered and weak. But its balance sheet (alone) can be a little misleading. Caterpillar is huge and it is diversified geographically. These features protect it, to some degree, and they permit it to use more debt than the average company. Furthermore, CAT’s balance sheet, right now, is actually stronger than its historical average. We are not concerned about CAT’s finances.
Caterpillar growth prospects are outstanding. In the short term, it is hard to believe the world economy will not experience a slow-down and possibly even a recession soon. But in the long term, growth prospects are bright for the world’s largest manufacturer of earthmoving equipment. And it is the long-term outlook that really matters.
Unfortunately, the market is very cognizant of Caterpillar’s strengths too, and it has rewarded its price accordingly. CAT’s price multiples are on the high side, and CAT presents no real bargain. CAT is a very good company. But at this point, we would not consider it one of our best monthly dividend stocks.
Stat Sheet – Caterpillar Incorporated 4/21/16
| Ticker | CAT |
| Industry | Construction & Agricultural Machinery |
| Price | $ 78.66 |
| Market Cap | $ 46,284 |
| Dividend Yield | 3.92 |
| Dividend/CFOp | 0.269 |
| Equity/Assets | 0.201 |
| Average Equity/Assets | 0.169 |
| Financial Strength | Average |
| Growth Prospects | Above Average |
| Beta | 1.57 |
| Price Volatility | Average |
| Stock Fundamentals | C |
(Our assessment of this firm’s fundamentals will be in effect for the rest of calendar year 2016)
If you would like to some of the other stocks we would also consider some of our top dividend paying stocks, click the link below.
Best Monthly Dividend Stocks and More
If you would like to learn the reason behind our preference for the best dividend paying stocks, click the link below.
Why We Gravitate to the Best Dividend Paying Stocks
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vershire 