Dividend Aristocrats In Focus: Caterpillar Inc.

Up to date on February twenty fourth, 2026 by Felix Martinez

Every year, we individually evaluation every of the Dividend Aristocrats, a bunch of 69 shares within the S&P 500 Index which have raised their dividends for no less than 25 consecutive years.

To make it on the checklist of Dividend Aristocrats, an organization should possess a worthwhile enterprise mannequin with a worthwhile model, world aggressive benefits, and the power to resist recessions. For this reason Dividend Aristocrats can proceed elevating dividends in troublesome years.

With this in thoughts, we now have created a listing of all 69 Dividend Aristocrats.

You may obtain your free copy of the Dividend Aristocrats checklist, together with vital monetary metrics corresponding to price-to-earnings ratios and dividend yields, by clicking on the hyperlink under:

Disclaimer: Certain Dividend just isn’t affiliated with S&P World in any approach. S&P World owns and maintains The Dividend Aristocrats Index. The data on this article and downloadable spreadsheet relies on Certain Dividend’s personal evaluation, abstract, and evaluation of the S&P 500 Dividend Aristocrats ETF (NOBL) and different sources, and is supposed to assist particular person traders higher perceive this ETF and the index upon which it’s primarily based. Not one of the info on this article or spreadsheet is official knowledge from S&P World. Seek the advice of S&P World for official info.

Caterpillar Inc. (CAT) joined the Dividend Aristocrats checklist in 2019. Much more spectacular is that Caterpillar operates in a extremely cyclical {industry}, which usually prevents corporations from sustaining lengthy histories of annual dividend will increase.

Nevertheless, Caterpillar’s administration staff has confirmed its dedication to returning money to shareholders even by means of the inevitable ebbs and flows of the enterprise through the years. Caterpillar additionally has sturdy aggressive benefits that permit it to lift its dividend every year, even by means of downturns within the world economic system.

Enterprise Overview

Caterpillar was based in 1925 and immediately competes within the manufacturing and promoting of development and mining tools. The corporate additionally manufactures ancillary industrial merchandise, together with diesel engines and gasoline generators. Caterpillar inventory has a market capitalization of ~$351 billion, making it one of many largest industrial shares on the planet.

Industrial producers benefited from sturdy demand in 2022 and 2021, which fueled progress and spurred world financial exercise off the low base established in 2020 amid the pandemic.

On January twenty ninth, 2026, Caterpillar delivered sturdy fourth-quarter 2025 outcomes, with gross sales rising 18% yr over yr to $19.1 billion, pushed primarily by increased tools demand throughout development, mining, and power markets.

Adjusted EPS reached $5.16, barely above the prior yr, whereas working margins declined to 13.9% on account of increased manufacturing and restructuring prices, together with tariff impacts. Progress was led by the Energy & Power section, the place gross sales elevated 23%, supported by oil & gasoline exercise and data-center energy technology demand.

For full-year 2025, income elevated 4% to a file $67.6 billion, whereas adjusted EPS totaled $19.06, down from $21.90 in 2024, as margins normalized from peak-cycle ranges. Regardless of decrease profitability, Caterpillar generated $11.7 billion in enterprise working money circulate and ended the yr with $10.0 billion in money, returning $7.9 billion to shareholders by means of dividends and share repurchases. Tools gross sales quantity remained the first progress driver, partially offset by weaker value realization.

Trying forward, Caterpillar enters 2026 with a file backlog and robust end-market demand, notably in infrastructure, power, and electrification-related initiatives.

Continued funding in energy technology, mining tools, and companies income positions the corporate for steady long-term progress, though margins might stay pressured within the close to time period by enter prices and restructuring actions.

Supply: Investor Presentation

Progress Prospects

Caterpillar is intently tied to world financial progress and commodity costs. Its clients extract sources from the earth and construct and assemble all kinds of buildings, so financial progress is vital to funding that improvement.

This results in pretty excessive cyclicality in Caterpillar’s outcomes, with the inventory swinging wildly throughout the extremes of the sentiment scale.

The coronavirus pandemic weighed closely on the corporate, however the ensuing world financial restoration enabled Caterpillar to turn into extremely worthwhile in 2021 and 2022. Caterpillar is offsetting increased manufacturing prices with increased costs.

We forecast $22.65 in earnings per share for 2026, with a 16% annual progress charge over the following 5 years.

Supply: Investor Presentation

Aggressive Benefits & Recession Efficiency

Aggressive benefits in industrial purposes will be difficult, on condition that some opponents make related merchandise for many purposes.

Nevertheless, through the years, Caterpillar has turn into probably the most vital gamers in profitable finish markets, together with development, power, and mining.

Its world presence affords it some diversification of income by section and {industry}, in addition to geographically, which has served it nicely in recent times. Its scale additionally permits it to leverage down variable prices per unit, boosting margins.

Nevertheless, Caterpillar is definitely not resistant to recessions, as world financial slowdowns are typically accompanied by decrease commodity costs and slower development spending.

These elements took a serious toll on Caterpillar’s backside line throughout the Nice Recession, as its earnings have been devastated, if solely briefly.

Caterpillar’s earnings-per-share throughout the Nice Recession are under:

• 2007 earnings-per-share of $5.32
• 2008 earnings-per-share of $5.71 (7% improve)
• 2009 earnings-per-share of $1.43 (75% decline)
• 2010 earnings-per-share of $4.15 (190% improve)

Whereas Caterpillar definitely felt the ache of the Nice Recession, its earnings rebounded pretty shortly, and it reclaimed its pre-recession earnings-per-share stage in 2011.

Caterpillar additionally skilled a big decline in earnings per share in 2020 because of the coronavirus pandemic, however recovered strongly since then in a brief time period.

Due to this fact, Caterpillar is clearly uncovered to recessions because of the financial bellwether nature of the heavy equipment {industry}. However it additionally has a historical past of recovering from downturns pretty shortly.

Valuation & Anticipated Returns

Caterpillar’s present price-to-earnings ratio is 33.9x, primarily based on the 2026 anticipated EPS of $22.65. That is an elevated valuation stage for Caterpillar. Since 2013, Caterpillar’s shares have traded with a median P/E ratio of about 17x. We consider 25x is an affordable, honest worth estimate for Caterpillar, given its cyclical enterprise and vulnerability to recessions and the present rising charge setting.

Durations of cyclicality are regular for Caterpillar’s valuation. Nonetheless, the inventory seems overvalued. A declining P/E a number of may scale back future returns; if the P/E a number of declines from 33.9x to 25x over the following 5 years, it could decrease annual returns barely.

One other adverse side of shares with elevated valuations is that they typically have decrease dividend yields. As Caterpillar’s share value has risen up to now yr, its dividend yield has declined to 0.8%. Dividends and earnings-per-share progress (anticipated to develop at 16% per yr) will add to shareholder returns, however the inventory’s overvaluation is a hurdle.

Based mostly upon the elements mentioned above, we see complete returns of 11.8% per yr. This leads us to charge Caterpillar a maintain immediately.

Ultimate Ideas

Caterpillar inventory continues its spectacular rise, up over 190% up to now yr, in contrast with the S&P 500 index’s acquire. Leads to 2026 are anticipated to be increased. Whereas the inventory is buying and selling above its common PE and our honest worth estimate, it’s severely overvalued.

Caterpillar has an industry-leading model and a optimistic long-term progress outlook, however we really feel the inventory has turn into overpriced amid the rally because the pandemic lows. With an anticipated future return within the low-double digits, we charge the inventory a maintain. Traders could also be higher off ready for a decline within the share value.

Additional studying: See evaluation on our favourite agriculture shares.

Moreover, the next Certain Dividend databases comprise essentially the most dependable dividend growers in our funding universe:

Should you’re on the lookout for shares with distinctive dividend traits, contemplate the next Certain Dividend databases: