Caterpillar Inc. (NYSE: CAT) has just done exactly what we expected with a dividend hike. We recently highlighted that it was one of only a few remaining DJIA stocks which will hike their dividends this year. The new payout will go to $0.52 per share per quarter versus a prior payout of $0.46 per share per quarter. That is a 13% hike to the payout rate and the new dividend yield will be 2.4% based upon a share price of $86.65.
We just noted last week how Caterpillar has had 4 consecutive payouts of $0.46 per share and the last payment was April 19 and that the hike would come very soon.
Today’s dividend hike does not jeopardize Caterpillar’s capital requirements as growth slows in the key BRIC nations. With earnings estimates of $9.73 EPS in 2012 and $11.47 EPS, the new rate of $2.08 per year is 21.3% of normalized earnings from operations for the next year. That is a low payout ratio for a company that is this well-heeled and this entrenched in the global infrastructure building.
Here are the other remaining DJIA components we expect dividend hikes from later in 2012.
JON C. OGG