Deere & Company

(New York Stock Exchange)
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Slightly Bullish +25

Caterpillar vs. Deere: Which Heavy Equipment Dividend Is Growing Faster?

Dividend AI-generated analysis

πŸ“ˆ Caterpillar raised its quarterly dividend by 8% to $1.63, marking the sixth consecutive year of high single-digit increases.

πŸ’° Caterpillar's dividends consumed only 37% of its 2025 free cash flow compared to Deere's 53%, indicating greater room for future raises.

πŸ“‰ Deere has held its quarterly dividend flat at $1.62 for two years due to a downturn in farm equipment demand.

πŸš€ Caterpillar posted a record $5.1 billion in quarterly free cash flow and bought back $5.0 billion of stock in Q1 2026.

πŸ“Š Deere has outperformed Caterpillar in long-term dividend growth, achieving roughly 170% total growth since 2016 versus CAT's 112%.

⚠️ Caterpillar faces volatility risks with a beta of 1.58 and shares falling 14.34% over the past month.

🌾 Deere expects U.S. and Canada large ag sales to fall 15-20% in the near term, impacting its ability to raise dividends soon.

πŸ’΅ Caterpillar trades at a forward P/E of 24x compared to Deere's 29x, making it the cheaper valuation option on earnings.

πŸ”‹ Data center demand drove Power Generation sales up 29% for Caterpillar in Q2, contributing to its strong outlook.

Bullish Signals
  • Deere has a superior long-term dividend growth track record, compounding its quarterly payout by roughly 170% since 2016 compared to Caterpillar's 112%.
  • Deere offers a lower beta of 0.872 and a slightly higher current yield of 1.01% compared to Caterpillar's 0.87%, appealing to risk-averse investors.
  • Management maintains confidence that 2026 represents the bottom of the agricultural equipment cycle, suggesting potential for future dividend resumption.
Risk Factors
  • Deere has frozen its quarterly dividend at $1.62 for two years due to a downturn in farm demand, with management expecting U.S. and Canada large ag sales to fall 15-20%.
  • Rising tariff costs are expected to increase by around $1 billion next year, adding pressure on margins and the ability to grow payouts.
  • The dividend freeze could last longer than anticipated until farm demand recovers, creating uncertainty for income-focused investors.
Full Analysis
Caterpillar (NYSE:CAT) and Deere (NYSE:DE) are being compared as heavy equipment dividend plays, but their recent trajectories differ significantly. Caterpillar recently announced its sixth consecutive quarterly dividend increase of 8% to $1.63 per share, while Deere has held its quarterly payout flat at $1.62 for two years following a previous hike. Financial metrics highlight Caterpillar's stronger current cash generation and capacity for growth. In fiscal 2025, Caterpillar generated approximately $7.45 billion in free cash flow, with dividends consuming only 37% of that amount compared to Deere's 53%. Additionally, Caterpillar posted a record quarterly free cash flow of $5.1 billion and has been aggressive with buybacks, purchasing $5.0 billion of stock in the first quarter of 2026 alone. Despite Caterpillar's current momentum, Deere holds an advantage in long-term dividend growth history, having compounded its payout roughly 170% since 2016 versus Caterpillar's 112%. However, Deere faces near-term headwinds including a projected 15-20% decline in large ag sales and rising tariff costs. Caterpillar is viewed as the superior choice for investors prioritizing immediate dividend growth, while Deere appeals to those seeking a lower beta stock with a higher current yield.