Caterpillar Inc. CAT has kept its quarterly dividend unchanged at $1.51 per share so far this year, with the next payout scheduled for May 19, 2025.
Caterpillar has paid a cash dividend every year since its inception and has maintained uninterrupted quarterly dividends since 1933. Notably, it has increased its annual dividend for 32 consecutive years and is recognized as a member of the S&P 500 Dividend Aristocrats Index.
At an annualized $6.04, Caterpillar’s dividend yield stands at 0.76%, slightly below manufacturing - construction and mining industry’s 0.78%. However, this largely reflects strong share price performance rather than any fundamental weakness. The company’s payout ratio of 32% remains healthy and above the industry average of 30.22%, indicating room for continued distributions.
The last dividend hike had come at a time when Caterpillar was navigating a period of declining revenues and earnings, with top-line contraction persisting for five consecutive quarters and earnings falling for three. Even so, management chose to raise the dividend, reinforcing confidence in the company’s long-term cash flow strength and resilience through economic cycles, including the pandemic and other macro headwinds.
Over the past five years, Caterpillar’s dividend has grown at a rate of around 8.16%, supported by its solid cash flow. In 2025, it deployed $5.2 billion of cash for repurchases of Caterpillar common stock and $2.7 billion of cash for dividends. The company aims to return substantially all Machinery, Energy & Transportation (ME&T) free cash flow to shareholders over time through dividends and share repurchases. Caterpillar has a current dividend/free cash flow ratio of 0.35, which has improved over the years.
Operationally, Caterpillar’s momentum has begun to improve. The company returned to revenue growth in the third quarter of 2025, with volumes rising across all segments. Its backlog surged by $11.3 billion sequentially to a record $51.2 billion by the end of the fourth quarter. Earnings also turned positive in the fourth quarter after five consecutive declines, albeit modestly. Looking ahead, Caterpillar expects 2026 revenue growth to trend toward the upper end of its long-term 5–7% CAGR target, signaling continued recovery.
Underlying demand trends remain favorable. Construction activity, commodity demand and investments in energy transition and data centers are all expected to support growth. Caterpillar’s expanding aftermarket services business, known for its high margins, further strengthens its earnings profile. The company remains well-positioned to deliver stable cash flows and sustain growth, despite near-term pressures from tariffs and broader macroeconomic challenges. Another dividend increase could be on the horizon.
A Look at Some Other Long Dividend-Paying Industrial Stocks
Illinois Tool Works Inc. ITW, a multi-industrial manufacturing leader, is also a member of the S&P 500 Dividend Aristocrats Index. The company has raised its dividend for 62 years. In August 2025, Illinois Tool Works raised its dividend by 7% to the current quarterly payout of $1.61. The company generally raises the dividend in August.
Illinois Tool Works has a five-year dividend growth of 7.2% and a current yield of 2.38%. Illinois Tool Works has a payout ratio of 61%. In 2025, Illinois Tool Works returned $3.3 billion of surplus capital to shareholders through dividends and share repurchases. ITW has a dividend/free cash flow ratio of 0.69.
Pentair plc PNR, a provider of various water solutions, has a current dividend yield of 1.20%. Pentair announced an 8% dividend hike on Dec. 15, 2025, and the raised dividend of 27 cents per share was paid in February 2026. This marks the 50th consecutive year that Pentair has increased its dividend.
During the year ended Dec. 31, 2025, the company repurchased 2.3 million shares for $225.0 million and paid $164 million as dividends. Pentair has a payout ratio of 20% and a five-year dividend growth of 5.8%. The company has raised its dividend for 50 straight years. Pentair’s dividend/free cash flow ratio stands at 0.24.
CAT’s Price Performance, Valuation & Estimates
CAT shares have gained 165.2% in a year compared with the industry’s 144.4% growth. In comparison, the Zacks Industrial Products sector has moved up 40.5%. The S&P 500 has gained 29.8% in the same time frame.
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Caterpillar is currently trading at a forward 12-month price/earnings (P/E) ratio of 32.66X compared with the industry average of 31.06X.
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The Zacks Consensus Estimate for CAT’s 2026 earnings indicates year-over-year growth of 19.8% and the estimate for 2027 indicates a 21.34% increase. Earnings estimates for Caterpillar for both 2026 and 2027 have moved up over the past 60 days.
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Caterpillar stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).