"Caterpillar Inc ( NYSE: CAT) manufactures heavy equipment that builds the world's infrastructure. The company just paid $1.51 per share in January 2026, bringing its annual dividend to $6.04 (up from $5.84 in 2025). That 3.4% increase extends a 15-year streak of annual raises. With a yield under 1%, you're not buying CAT for income today. You're buying it for what the dividend becomes over the next decade."
"Caterpillar earned $19.48 per share over the trailing twelve months through Q3 2025, giving it an earnings payout ratio of 30%. That's plenty of room. The company paid $2.0 billion in dividends during the first nine months of 2025 against $5.4 billion in free cash flow, for a 37% FCF payout ratio. Operating cash flow of $8.1 billion covered dividends 4.1 times over."
"Total debt sits at $41.5 billion against $20.7 billion in equity, producing a 2.0x debt-to-equity ratio. That's elevated but not unusual for an industrial manufacturer with a finance arm. Net debt of $34 billion divided by $14 billion in EBITDA gives you 2.4x leverage. Interest coverage stands at 8.8x based on Q3 operating income versus interest expense."
Caterpillar paid $1.51 per share in January 2026, bringing the annual dividend to $6.04 and marking a 15-year streak of raises. Trailing twelve-month earnings of $19.48 per share imply a 30% earnings payout ratio. Dividends of $2.0 billion in the first nine months of 2025 against $5.4 billion in free cash flow equal a 37% FCF payout ratio, and operating cash flow covered dividends 4.1 times. Total debt of $41.5 billion versus $20.7 billion in equity yields a 2.0x D/E, with net debt/EBITDA of 2.4x and interest coverage of 8.8x. Cash of $7.5 billion and growing retained earnings support dividend resilience through downturns.
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