The agriculture equipment maker, Deere & Company DE, has announced a hike of 15% in its quarterly cash dividend. The company will now pay a dividend of 69 cents per share, up from the 60 cents paid earlier. The raised dividend will be paid on Aug 1, to shareholders of record as on Jun 29, 2018.
Based on the increased rate, the annual dividend comes to $2.76 a share, resulting in yield of about 1.8%, considering Deere’s closing price of $155.08 on May 30. The company has been consistently increasing its dividends. This reflects Deere’s continued efforts to boost shareholders’ wealth.
Since 2010, Deere has raised its dividend by 146%. From paying 28 cents a share as quarterly dividend in 2010, it has come a long way in displaying its capital strength. Prior to this hike, the company had raised its dividend by 20% in 2014.
Notably, Deere has strong fundamentals to back dividend hikes. In fact, the company has been a decent performer, beating the Zacks Consensus Estimate in three out of the past four quarters, with an average positive surprise of 4.21%. Moreover, Deere’s return on equity (ROE) is 27.7%, significantly higher than the industry’s ROE of 9.4%.
Deere’s performance will also be supported by solid growth outlook for equipment sales in fiscal 2018. Its equipment sales are expected to rise around 30% year over year, driven by improved operational performance, and continued investment in innovative technology and solutions. Rising replacement demand, strength in Brazil, higher housing starts, improving oil and gas sector, and the Wirtgen acquisition also bode well for its performance.
Moreover, shares of the company have outperformed the industry in a year’s time. The stock has gained around 24% compared to 21% growth recorded by the industry during the period.
Zacks Rank & Key Picks
Deere carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the same sector are Axon Enterprise, Inc AAXN, Caterpillar Inc. CAT and Terex Corporation TEX. All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Axon Enterprise has a long-term earnings growth rate of 25%. Its shares have appreciated 161%, over the past year.
Caterpillar has a long-term earnings growth rate of 13.3%. The company’s shares have been up 47% in the past year.
Terex has a long-term earnings growth rate of 21%. The stock has gained 21% in a year’s time.
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