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Old 11-13-2015, 09:33 AM   #21
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My thoughts on CAT-
I typically would not invest in Caterpillar because it is a cyclical company and therefore the earnings are too unpredictable and subject to large swings for the type of dividend investing I prefer. But I reviewed CAT from a 15 year perspective and it seems to me:

1) Earnings during the early 2000's saw a range of 1-2 dollars with about .70 being paid out, realizing about 50% payout ratio. During the next 4 years earnings exploded with the China boom and earnings grew to over $5.00 per share. Much of that income was used to double the dividend to over $.50 by 2008 but even more was used in capital spending as CAT embarked on investing in their business with capital spending increasing from $1.50 per share early in the 2000's to over $6.00 per share by 2008 investing even more than they made, using debt which was becoming cheaper by the year to finance the investment spurt. During the 2008 - early 2009 debacle CAT stock fell by 75%.

2) In 2010 began the FED's ZIRP policy and the mining industry was the big utilizer of ZIRP and CAT a major beneficiary. Earnings peaked at $9.00 per share and CAT continued to invest at $6.00-$7.00 per share in capital projects.

3) A good indicator of the overspending on capital is the steady decline over the past 10 years on return of total capital from the 14-16% range in 2005-2006 to the 8.5% for 2015. Recently CAT has cut their capital spending to about $3.15 per share, with depreciation of $5.10 per share they have $1.95 in favorable cash flow on investments.

4) Though dividends are now almost 60 percent of earnings they are very affordable because of the decline right now in capital investments and why CAT could afford to increase the dividend by 10 percent this year in a declining earnings environment. Make no mistake, CAT is selling products to an overbuilt industry and could have reduced sales for years as a result of ZIRP policy, however reduced capital spending demands means the dividend for the foreseeable future is secure.

5) At the present time I would view CAT as a low growth potential bond substitute stock with cyclical risk offsetting the inflation protection dividends provide. Debt has been added and utilized by CAT but manageable and not increased at same rate as some other companies as they had the benefit of earnings exploding during the mining ZIRP boom as they are early winner in the commodity chain. I would not invest in CAT as they do not meet my minimum qualifications for earnings predictability but if I had them as an investable company I would be targeting a 5% dividend yield or about 60 dollars per share as being the price to target and watch for the price to be hit.
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Old 11-13-2015, 03:34 PM   #22
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Forget the price
http://finance.yahoo.com/q/hp?s=CAT&...=13&f=2015&g=v

Those dividends look sweet...



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Old 11-16-2015, 01:42 PM   #23
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Still sliding downward ... CAT likely to see upper 50's before it sees 70 again.
... or maybe not ??
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Old 11-20-2015, 03:07 AM   #24
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I stand corrected. Nice pop. Dividend hard to beat. Probably a classic buffet value play in the mid 60s.
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Old 01-20-2016, 12:25 PM   #25
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As frequently happens with stocks in an industry in distress that is being considered for the dividend it has fallen further and is now below the 60 I would have targeted, would this have been the type of dividend stock I would buy, which I don't because of earnings being too volatile and unpredictable over the long term. However for the near term (next few years) they should easily be able to fund the present dividend.
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Old 01-20-2016, 12:33 PM   #26
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Well... It never quite got to 70 and here we are at 57 ....

Anyway, I think it's a value play at the 50 dollar level


I don't play individual stocks any more but this one would be on my risky but interesting list.
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Old 01-23-2016, 10:54 AM   #27
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I have some, too much really and I held onto it all the way down, the dividend is smoothing my negative thoughts for now.

I might sell some, grab something else, and buy back in after harvesting the capital loss, but not so sure when things are so volatile.
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Old 01-23-2016, 11:21 AM   #28
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My male hormonal twinge is still there - for a few good stocks.

But - I looked at the wife and she looked at me and excess after tax RMD is going toward some remodeling on our 1922 Craftsman bungalow.

heh heh heh - so may sell one or two of the 5 I have left and switch. But the holding period, 10-15 years has been so long there are cap gains to pay even on the dogs.
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Old 01-23-2016, 12:06 PM   #29
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I have some, too much really and I held onto it all the way down, the dividend is smoothing my negative thoughts for now.

I might sell some, grab something else, and buy back in after harvesting the capital loss, but not so sure when things are so volatile.
I do not know what is the best thing for you to do, but if you had waited for 60 to buy the stock, and now held it would you be considering selling? Selling for only tax reasons are decisions that never enter my investing mind, in the long term the short term fluctuations of price are not as important as outlook for the company, dividends and changes from my original thinking. None of this from what I can see has changed for CAT other than the stock price, which is not a reason to sell unless watching the price drop to 40 or so would be very upsetting to you, then you should sell it as this is not a stock you should have purchased in the first place.
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Old 01-23-2016, 12:30 PM   #30
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I do not know what is the best thing for you to do, but if you had waited for 60 to buy the stock, and now held it would you be considering selling? Selling for only tax reasons are decisions that never enter my investing mind, in the long term the short term fluctuations of price are not as important as outlook for the company, dividends and changes from my original thinking. None of this from what I can see has changed for CAT other than the stock price, which is not a reason to sell unless watching the price drop to 40 or so would be very upsetting to you, then you should sell it as this is not a stock you should have purchased in the first place.
I might have a large capital gain this year, so I could off-set it which is why the tax consideration.

As for the stock itself, I had really bought too much and did sell some earlier when it was still high, just to reduce my holdings in it.
Naturally I wish I sold more of it back then.

What I might do is sell some, and buy some CMI as that is another stock I always wanted, but considered too expensive, now it's also on sale.

CMI has a good cash position, not much debt, and pays a good dividend like CAT.
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Old 01-23-2016, 01:22 PM   #31
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We are in the middle of a worldwide recession. I would wait until we get some inflation when it makes sense for companies to spend money.
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Old 01-23-2016, 02:33 PM   #32
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We are in the middle of a worldwide recession. I would wait until we get some inflation when it makes sense for companies to spend money.
Not exactly in the middle but they are some fears that it could start.
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Old 01-23-2016, 04:50 PM   #33
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This thread made me look. I last bought CAT at 66 in Sep 2015. It went back as high as 75, and is now at 61. I am not going to buy more before I see signs that commodity prices start going up.
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Any One Have Any Thoughts on CAT
Old 01-25-2016, 08:02 AM   #34
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Any One Have Any Thoughts on CAT

Goldman just downgraded CAT today...To sell.

Off 3 points before the open at 58.

Goldman's new price target is 51,

about what I suggested above that it becomes interesting around 50 for a long term play.

http://m.benzinga.com/article/616581....google.com%2F
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Old 03-05-2016, 12:53 AM   #35
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Even I was a bit surprised to see Cat over $73 yesterday - not sure what is driving this , but the man who bought in the 50's not too many weeks back must be feeling good ...................
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Old 07-27-2016, 05:32 PM   #36
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I locked into Cat for the dividend based on the dogs of the Dow theory in November I think. Dividend has been nice and the run up in price has been even better. Wonder if anyone has different opinions for next 3-5 yrs. if infrastructure maintenance deferrals are addressed, I see continued strength. If not, I'll keep earning the 3.5-4% yield. Am I missing the obvious here?
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Old 07-27-2016, 08:26 PM   #37
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As I view CAT as a bond substitute, with the risk of a dividend cut as their business continues to struggle a 3.6% yield is not nearly as enticing as when CAT was at 60 for 5.1% yield and the lack of increasing the dividend while not signifying a cut does signify management concerns over cash. Other stocks, such as Southern Company I mention in another thread have a yield of 4.18% would be a better bond substitute than CAT. However, my personal preference is not to invest in either of these at the present time but my advice were I to invest in these types of dividend stocks would be to sell CAT and take the 38% capital gain and switch into Southern Co. The best part of this switch is that dividends for each original $6000 100 share investment in CAT paying $308 per year would now be 158 shares of SO paying $354 per year in dividends a 17 percent increase in dividends received in a circumstance for low growth dividend stocks.
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Old 07-28-2016, 12:01 AM   #38
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I recently sold the remaining CAT's that I expect to have left over after my option is exercised.

The Dividend they pay out each year is more than the money they make each year,
the Dividend Payout Ratio is 1.67
Who knows where it will be, but I sold all my CAT as I had to sell something and I know I would not buy CAT right now for these reasons:
- Outlook by company is bad again.
- Stock jumped in price 16% in last month.
- dividend while good is at risk since it takes more than all their earnings.
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Old 07-28-2016, 02:27 AM   #39
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Things are "Interesting" for CAT right now ...........

I can't see what is driving price up - no logical sense to me , I would be getting out right now at a nominal $84 price .... BUT , remember that if "I " am selling now at 84 .... some one else must be thinking it's a good buy at that same figure !!

I think div will be maintained .... they have a long track record of increasing div , or at very worst keeping it the same for (from memory) two years. They won't want to break that pattern ........ just my view.
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Old 07-28-2016, 05:30 AM   #40
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Things are "Interesting" for CAT right now ...........

I can't see what is driving price up - no logical sense to me , I would be getting out right now at a nominal $84 price .... BUT , remember that if "I " am selling now at 84 .... some one else must be thinking it's a good buy at that same figure !!

I think div will be maintained .... they have a long track record of increasing div , or at very worst keeping it the same for (from memory) two years. They won't want to break that pattern ........ just my view.

They'll do what they need to keep their financials stable. China has hurt their profits for the past few years. I'd sell if I owned any and did sell what I owned last year. There are better dividend plays out there.


Enjoying life!
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