Caterpillar vs. Deere: Which Heavy Equipment Dividend Is Growing Faster?
Caterpillar and Deere both look like reliable income plays until you compare their dividend trajectories over the past two years, where one stock tells a very different story than its long-term reputation suggests.
Should a retirement-focused investor own Caterpillar (NYSE:CAT | CAT Price Prediction) or Deere (NYSE:DE) right now? Both stocks offer modest current income, with yields of 0.87% and 1.01%, so the useful question is whose dividend grows faster from here. Caterpillar just raised its payout again. Deere has held its quarterly payout flat for two years.
Dividend Momentum: Caterpillar Keeps Raising While Deere Stands Still
Caterpillar’s quarterly dividend rose from $1.51 to $1.63 starting with the July 2026 payment, lifting the annualized forward rate to $6.52. The company’s finance chief summed it up on the second-quarter call: “In June, we announced an 8% dividend increase, our sixth consecutive year with a high single-digit quarterly increase.”
Deere has paid exactly $1.62 per quarter since the December 31, 2024 ex-dividend date, up from $1.47 before that. Deere’s August earnings call said nothing about dividend growth. Winner: Caterpillar.
Long-Term Track Record: Deere Has Compounded Faster
Over the long run, the numbers favor Deere. Its quarterly dividend was $0.60 in 2016, so today’s rate is growth of roughly 170%. Caterpillar paid $0.77 in 2016, which works out to about 112% growth. Over five years, Deere still leads, at about 54% against Caterpillar’s 47% (if that kind of multi-decade increase streak is what you’re after, we ranked ten of the longest-tenured dividend growers by valuation in a free Dividend Kings report). Winner: Deere. The current freeze, though, shows how fast a farm downturn can stop the raises.
Cash Coverage: Caterpillar Has More Room to Raise
In 2025, Caterpillar brought in $11.739 billion of operating cash flow and spent $4.286 billion on capital projects. That left about $7.45 billion in free cash flow. Dividends of $2.749 billion used up only about 37% of it. For Deere’s fiscal 2025, operating cash flow of $7.459 billion minus $4.228 billion of capital spending left about $3.23 billion, and dividends of $1.72 billion took roughly 53%.
Measured against earnings, Caterpillar’s forward dividend equals about 28% of trailing EPS of $23.23. Deere’s forward dividend equals about 36% of trailing EPS of $17.99. Caterpillar also bought back $5.0 billion of stock in the first quarter of 2026 alone. Deere repurchased $697 million over the first nine months of its fiscal year. Winner: Caterpillar.
Verdict: Caterpillar Is the Dividend Grower Retirees Should Research First
Caterpillar is the top pick for investors seeking a steadily rising dividend. Second-quarter MP&E free cash flow hit a record $5.1 billion (MP&E covers Caterpillar’s machinery, power and energy businesses). The backlog reached $72 billion, and management raised its 2026 sales outlook to mid- to high-teens growth, with data center demand driving Power Generation sales up 29%. It is also the cheaper stock on forward earnings, at 24x versus Deere’s 29x.
Caterpillar’s key risk: price swings. Its beta is 1.58, which means the stock has moved more than the broader market, and shares fell 14.34% over the past month. Construction and mining demand could also cool just as 2026 tariff costs reach about $2.2 billion.
Deere fits a different investor: a patient retiree who wants a calmer stock, with a beta of 0.872 and a slightly higher yield, and who expects raises to resume once farm demand recovers. Its finance chief said the company “continue[s] to believe that 2026 represents the bottom of the ag equipment cycle.”
Deere’s key risk: the dividend freeze could last longer. Management expects U.S. and Canada large ag sales to fall 15-20%, and tariff costs are expected to rise to around $1 billion next year. Watch for Deere’s December dividend declaration. Last year, it came on December 3, 2025, and the payout stayed unchanged. Until Deere raises again, Caterpillar is the stronger dividend grower.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
