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Analyzing Deere's Quarterly Dividend before Its Record Date

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Analyzing Deere's Quarterly Dividend before Its Record Date PART 1 OF 5

Deere Didn’t Change Its Final Dividend in Fiscal 2017

Deere’s quarterly dividend

Deere’s (DE) board has declared the regular quarterly dividend that will be paid on its outstanding shares. Deere will be paying a dividend of $0.60 per share. The dividend will be paid on November 1, 2017. Investors who hold the share as of September 29, 2017, will be eligible for the announced dividend. Peers Caterpillar (CAT) and AGCO (AGCO) announced a quarterly dividend of $0.78 and $0.14 per share, while CNH Industrial (CNHI) has paid an annual dividend of 0.12 per share.

Deere Didn&#8217;t Change Its Final Dividend in Fiscal 2017

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Deere’s declared dividend will be the final dividend in 2017. Its dividend of $0.60 per share implies no changes in the dividend rate compared to the previous year. Deere hasn’t increased its dividend since 3Q14. Since 2012, Deere’s dividend has grown at a CAGR (compound annual growth rate) of 6.0%.

Free cash flow

A positive free cash flow is good for the company. It supports financial activities like share repurchases, dividend payments, and finance expansion activities. We’ll see if Deere’s free cash flow can support its dividend plan. For our understanding, we’ll convert Deere’s free cash flow into free cash flow per share. Since 2011, Deere’s free cash flow per share has grown from $3.02 to $9.78 at the end of 2016, which implies a CAGR of 26.50%. The free cash flow per share growth is higher than the dividend growth, which supports Deere’s dividend plan.

Investors looking for indirect exposure to Deere can invest in the Agribusiness ETF (MOO). MOO has invested 7.20% of its portfolio in Deere as of September 18, 2017.

In the next part, we’ll discuss Deere’s dividend yield and dividend payout.

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