Deere Investors Will Receive Third Dividend in Fiscal 2017
Deere’s quarterly dividend
Deere (DE) investors are set to receive their third dividend for fiscal 2017. Deere declared a dividend of $0.60 for 3Q17 on the company’s outstanding shares. The company is expected to pay the dividend on August 1, 2017, to investors who hold shares at the close on June 30, 2017. Caterpillar (CAT) is paying a dividend of $0.78, while AGCO (AGCO) paid a dividend of $0.14 on June 15.
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Deere’s dividend growth
Deere’s 3Q17 dividend of $0.60 per share implies no change in the dividend rate compared to the previous year. Since 3Q14, Deere hasn’t increased the dividend—it maintained the rate of $0.60 per share. The dividend might have disappointed long-term investors looking for stable income. Since 2012, Deere’s dividend has grown at a CAGR (compound annual growth rate ) of 7.60%.
Deere’s cash flow
Free cash flow plays a crucial role in dividend payment and growth. Dividends are generally paid out of free cash flow. We’ll convert Deere’s free cash flow into free cash flow per share. Since 2012, Deere’s free cash flow per share has grown at a CAGR of 26.5% and outpaced the dividend growth. So, we can conclude that Deere’s free cash flow is strong enough to support its dividend growth.
To hold Deere indirectly, investors can invest in the iShares MSCI Global Agriculture Producers ETF (VEGI). VEGI has invested 9.9% of its portfolio in Deere. Monsanto (MON) is the fund’s top holding with a weight of 14.9% as of June 20, 2017.
In the next part, we’ll discuss Deere’s current dividend yield and dividend payout.