I had initially planned on holding off on any purchases this month due to a planned vacation and some expenses. It just so happened that a planned expense for the month is being put off for another month so I had a little extra cash burning a hole in my pocket.
I was close to purchasing CAT back in 2009 for around $40/share and regret that decision ever since. CAT has had a huge run and record earnings since then and I've just watched as CAT reached a high of around $120/share in 2011. The shares have come back down to earth and I believe will be a nice addition to my portfolio.
I purchased 21 shares @ $92.37/share this morning. The shares currently yield 2.25%. This purchase will add an additional $43.68 to my yearly dividend income.
Caterpillar has increased its dividend for 19 straight years. It has a 5-year CAGR of 10.4% and a P/E of 10.4 and according to E*Trade have a low payout ratio of only 20.24%.
From E*Trade:
Caterpillar Inc. (Caterpillar) is a manufacturer of construction and mining equipment, diesel and natural gas engines, industrial gas turbines and diesel-electric locomotives. It operates in two segments: Machinery and Power Systems, and Financial Products. Machinery and Power Systems represents a total of Construction Industries, Resource Industries, Power Systems and All Other segments and related corporate items and eliminations. Financial Products includes the Company's Financial Products Segment. This category includes Cat Financial, Caterpillar Insurance Holdings Inc. and their respective subsidiaries. In October 2011, the Company acquired MWM Holding GmbH (MWM). Effective March 1, 2012, the Company announced that Caterpillar Japan Ltd. (Caterpillar Japan) acquired Caterpillar Tohoku Ltd. (Cat Tohoku). In August 2012, Platinum Equity, LLC. acquired a majority interest in Caterpillar Logistics Services. Caterpillar will retain a 35% equity stake in the business.
Nice buy here. CAT has showed some weakness lately. Great industrial name here.
ReplyDeleteIt seems like some of the names with lower yields have better valuations than the high-yielding names that have been scooped up by yield hungry investors left with nowhere to turn.
Nice buy!
Best wishes.
Hi DM,
DeleteThanks for commenting. I like the value here and my overall portfolio is still yielding close to 4% so I do not mind picking up some lower yielding but higher growth stocks.
Good purchase! CAT is a strong industrial company and the stock is trading at a nice valuation. A while back I came close to buying it near $80. For the time being I will probably just continue to watch it, but if it were to drop further, I might initiate a position.
ReplyDeleteThanks DGM.
DeleteI think CAT is at a fair valuation and if it drops to $80 It would make us both happy :)
I like the CAT purchase. I should have picked some up the last time it hit the low $80's although I feel it's much more of a gains play than DG due to their cyclical DG as well as earnings. I just wish their yield was a little higher but they definitely have room to increase their DG rate with their low payout ratio.
ReplyDelete