Caterpillar Inc. Increases Dividend and Increases Share Repurchase Authorization

Rhea-AI Summary

Caterpillar Inc. (NYSE: CAT) announced an 8% increase in its quarterly dividend to $1.41 per share, payable on August 20, 2024, for shareholders of record as of July 22, 2024. Additionally, the Board of Directors approved a $20 billion increase in share repurchase authorization, bringing the total to approximately $21.8 billion. This decision aligns with Caterpillar's strategy to return most of its Machinery, Energy & Transportation (ME&T) free cash flow to shareholders via dividends and share repurchases. CEO Jim Umpleby attributed these actions to strong financial performance and continued robust ME&T free cash flow. Caterpillar has consistently paid dividends since its inception and has raised annual dividends for 30 consecutive years, solidifying its status as an S&P 500 Dividend Aristocrat.

Positive

• 8% increase in quarterly dividend to $1.41 per share.
• Dividend payable on August 20, 2024, for shareholders of record as of July 22, 2024.
• $20 billion added to the share repurchase authorization.
• Total share repurchase authorization now approximately $21.8 billion.
• Strong financial performance cited as the reason for increased dividends and buybacks.
• Continued robust ME&T free cash flow fuels shareholder returns.
• 30 consecutive years of increased annual dividends.
• Member of the S&P 500 Dividend Aristocrats Index.

Negative

• No specific financial performance metrics provided to substantiate claims.
• Increased dividend and buyback may signal fewer reinvestment opportunities.

Insights

Financial Analyst

Caterpillar Inc.'s decision to increase its quarterly dividend by 8% and to authorize an additional $20 billion for share repurchases speaks volumes about the company's financial health and management confidence in its future. Dividend raises often signal strong earnings and cash flows, making the stock more attractive to income-focused investors. The increase to $1.41 per share is a significant jump, reflecting Caterpillar's robust free cash flow from its Machinery, Energy & Transportation (ME&T) segment.

Moreover, the expanded share repurchase program demonstrates commitment to returning value to shareholders, which can help boost earnings per share (EPS) by reducing the number of shares outstanding. This move is generally seen positively by the market, especially when a company has a history like Caterpillar's of consistent dividend payouts and share buybacks.

Investors should understand that while these actions increase short-term shareholder value, they also reflect the company's confidence in sustaining its cash flows. Such strategies are particularly noteworthy given the volatility in the industrial sector, where cyclical demand can impact earnings.

Market Research Analyst

The increase in dividend and share repurchase authorization indicates a strategic alignment with shareholder value maximization. The industrial sector, especially companies like Caterpillar, is often scrutinized for its capital allocation policies. By continuing to prioritize dividends and buybacks, Caterpillar reinforces its position as a reliable income-generating stock in the market.

Additionally, the substantial increase in the share repurchase authorization to $21.8 billion suggests that the company perceives its stock as undervalued or that there are limited higher-return investment opportunities currently available. This could be a strategic move to enhance shareholder value during periods of market uncertainty or slow industrial growth.

The alignment with long-term profitable growth and the emphasis on returning a significant portion of ME&T free cash flow to shareholders is a clear message of confidence from management. It’s also a signal to the market that the company is well-positioned financially to withstand economic cycles and reinvestment needs without compromising shareholder returns.

IRVING, Texas, June 12, 2024 /PRNewswire/ -- The Board of Directors of Caterpillar Inc. (NYSE: CAT) voted today to raise the quarterly dividend by eleven cents, an 8% increase, to one dollar and forty-one cents ($1.41) per share of common stock, payable August 20, 2024, to shareholders of record at the close of business on July 22, 2024. The Board of Directors also added $20 billion to its current share repurchase authorization, which was launched in 2022 with no expiration date. With the new authorization, Caterpillar Inc. may repurchase up to approximately $21.8 billion of its common stock. Caterpillar expects to continue to return substantially all Machinery, Energy & Transportation (ME&T) free cash flow to shareholders over time through dividends and share repurchases.

"We continue to generate robust ME&T free cash flow through the execution of our enterprise strategy for long-term profitable growth," said Caterpillar Chairman and CEO Jim Umpleby. "Our strong financial performance supports increasing our quarterly dividend and share repurchase authorization, which aligns with our commitment to return substantially all ME&T free cash flow to shareholders over time."

Caterpillar has paid a cash dividend every year since the company was formed and has paid a quarterly dividend since 1933. Caterpillar has paid higher annual dividends to shareholders for 30 consecutive years and is recognized as a member of the S&P 500 Dividend Aristocrats Index.

About Caterpillar
With 2023 sales and revenues of $67.1 billion, Caterpillar Inc. is the world's leading manufacturer of construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. For nearly 100 years, we've been helping customers build a better, more sustainable world and are committed and contributing to a reduced-carbon future. Our innovative products and services, backed by our global dealer network, provide exceptional value that helps customers succeed. Caterpillar does business on every continent, principally operating through three primary segments – Construction Industries, Resource Industries and Energy & Transportation – and providing financing and related services through our Financial Products segment. Visit us at caterpillar.com or join the conversation on our social media channels at caterpillar.com/en/news/social-media.html.

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SOURCE Caterpillar Inc.

FAQ

What is the new quarterly dividend for Caterpillar Inc. (CAT)?

The new quarterly dividend for Caterpillar Inc. (CAT) is $1.41 per share.

When is the next dividend payable date for Caterpillar Inc. (CAT)?

The next dividend payable date for Caterpillar Inc. (CAT) is August 20, 2024.

What is the record date for the upcoming Caterpillar Inc. (CAT) dividend?

The record date for the upcoming Caterpillar Inc. (CAT) dividend is July 22, 2024.

How much has Caterpillar Inc. (CAT) increased its share repurchase authorization by?

Caterpillar Inc. (CAT) has increased its share repurchase authorization by $20 billion.

What is the total share repurchase authorization for Caterpillar Inc. (CAT) after the recent increase?

The total share repurchase authorization for Caterpillar Inc. (CAT) after the recent increase is approximately $21.8 billion.

How long has Caterpillar Inc. (CAT) been increasing its annual dividends?

Caterpillar Inc. (CAT) has been increasing its annual dividends for 30 consecutive years.