The construction industry is cyclical. You may think the industry would not produce any consistent dividend stocks, but that's not the case.
Caterpillar (CAT) has been paying dividends since 1925. The company has not reduced its dividend payments since 1982. The company's long dividend history makes it a member of the exclusive Dividend Achievers Index.
Caterpillar (CAT) is the construction equipment manufacturing industry leader. The company has grown to reach a market cap of $50.6 billion.
As a large cap stock, Caterpillar divides its operations into 5 smaller segments. Each of the company's 5 segments is listed below along with the percentage of total operating profits generated in Caterpillar's most recent quarter.
The construction and energy/transportation segments together account for 77% of Caterpillar's operating income. These segments are by far the most important for the company.
Caterpillar's Growth
Caterpillar operates in several highly cyclical industries. As a result, the company's earnings fluctuate wildly from year to year. This makes it impractical to judge the company on growth in any one year.
To gauge Caterpillar's growth, I took the company's average earnings from 2005 through 2009 and compared them to average earnings from 2010 through 2014. Using this ‘smoothing' technique, Caterpillar has grown earnings-per-share at 9% a year over the last decade.
The company has grown its dividend payments even faster. Dividends per share have compounded at 12.2% a year over the last decade.
Caterpillar is currently in a ‘down' phase. The company's expected earnings-per-share in 2015 are forecasted to be down 46% versus all time earnings-per-share highs set in 2012. Nevertheless, the company's long-term growth prospects remain bright.
