June 26, 2012
The following video is part of our "Motley Fool Conversations" series, in which analyst John Reeves discusses topics across the investing world.
Over the next several weeks we'll be looking at each of the components of the Dow Jones Industrial Average and subjecting them to a dividend checkup. Today, we're looking at Caterpillar. Caterpillar manufactures and sells construction and mining equipment, and it's the largest manufacturer of heavy equipment in the world. It just raised its dividend by 13%, and has been named one of top 25 Dividend Giants by the ETF Channel. Caterpillar's yield is 2.4%, which compares with the average yield for the Dow of approximately 3%. Fellow Dow stalwart United Technologies pays out 2.8%. Caterpillar is down about 6% for the year. It's very sensitive to the state of the global economy. For example, a recent piece in The Wall Street Journal noted that slowing growth in China was hurting Caterpillar as well as other manufacturers like ABB. Even consumer powerhouse McDonald's, however, has been affected by the slowing growth in Asia. All in all, Caterpillar is a good long-term dividend play that might face short-term volatility as a result of global economic conditions.
Among dividend stocks, Caterpillar shapes up pretty well. If you'd like to learn more about some additional outstanding dividend payers, The Motley Fool has compiled a special free report outlining our top nine dependable, dividend-paying stocks. It's called "Secure Your Future With 9 Rock-Solid Dividend Stocks." You can access your copy today at no cost! Just click here to discover the winners we've picked.