Deere’s Dividend Yield: Impacted by Stagnant Dividend Growth?
Deere’s current dividend yield
Income investors always look for companies with a higher dividend yield. It’s a measure of the company’s annual dividend per share relative to its price per share. It tells an investor how much return he gets for every dollar invested in the company’s equity. The dividend yield is usually expressed as a percentage.
As of June 20, 2017, Deere’s (DE) stock price closed at $126.04. With the current dividend rate, Deere’s current dividend yield is 1.90%. Caterpillar (CAT), AGCO (AGCO), and CNH Industries (CNHI) have current dividend yields at 2.90%, 0.83%, and 1.0%, respectively.
Interested in AGCO? Don't miss the next report.
Receive e-mail alerts for new research on AGCO
Among its peers, only Caterpillar has a better dividend yield than Deere. Since 2012, Deere’s dividend has largely been 2.2%–3.2%. The current dividend’s fall to 1.9% could be a concern. The dividend yield fell due to the rapid rise in Deere’s stock price. Zero dividend growth since 2014 has hurt the dividend yield. If the trend continues, Deere’s dividend yield could continue to fall. However, Deere’s dividend yield is still better than the yield on one-year Treasury bills.
Deere’s dividend payout
Since 2012, Deere’s dividend payout ratio was under 25%. With lower net income, Deere’s dividend payout ratio rose sharply to 49.70% in 2016. If the trend continues, Deere will have a hard time planning its future growth and expansion. In the first six months of fiscal 2017, Deere’s dividend payout has fallen to 38.70% due to increased earnings per share.
Investors can indirectly invest in Deere by investing in the Agribusiness ETF (MOO), which invested 8.5% as of June 20, 2017.
In the next part, we’ll discuss Deere’s latest valuations.