Deere & Company’s DE board hiked its quarterly cash dividend by 9%. Deere will now pay a quarterly cash dividend of $1.47 per share, up from the prior rate of $1.35 per share. The new quarterly dividend brings the company’s annualized dividend rate to $5.88 per share. The quarterly dividend will be paid out on Feb 8 to shareholders of record as of Dec 29, 2023.
The company’s previous dividend hike of 8% was announced in August 2023. The revised dividend of $1.47 per share will take DE’s dividend yield from the current 1.48% to 1.61%. The company has a payout ratio of around 16%.
Over the five years, the company raised its dividend five times, registering a five-year dividend growth rate of 14.6%. Deere’s five-year average dividend yield of 1.48% is higher than the industry’s 1.27%. Over the past five years, the company’s payout has averaged 14.6%, higher than the industry’s 13.91% payout.
Deere’s peer AGCO Corporation AGCO has a five-year average dividend yield of 1.01%. Based on payout over the past five years, AGCO has managed to outscore Deere with an average ratio of 37.3%. AGCO has increased its dividend four times in the past five years. Its five-year dividend growth rate of 15.1% is also higher than Deere’s.
Deere recently reported fourth-quarter fiscal 2023 (ended Oct 29, 2023) earnings of $8.26 per share, beating the Zacks Consensus Estimate of earnings of $7.49 per share. The bottom line increased 11% from the prior-year quarter’s levels, backed by favorable market conditions and price realization.
Net sales of equipment operations (comprising Agriculture and Turf, Construction and Forestry) were down 4% year over year to $13.8 billion but surpassed the consensus estimate of $13.6 billion. Total net sales (including financial services and others) were $15.4 billion, down 1% year over year.
Deere reported cash and cash equivalents of $7.46 billion at the end of fiscal 2023 compared with $4.77 billion recorded at fiscal 2022 end. Cash flow from operating activities was $8.6 billion in fiscal 2023 compared with $4.7 billion in the prior fiscal.
Deere projects year-over-year declines in all its segments in fiscal 2024, reflecting its anticipation of weak demand. Net income for fiscal 2024 is expected to be between $7.75 billion and $8.25 billion. The midpoint of the guidance indicates a year-over-year slump of 21%.
Price Performance
Deere’s shares have lost 17.5% in a year compared with the industry’s 21.1% decline.
Image Source: Zacks Investment Research
Zacks Rank & Stocks to Consider
Deere currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the Industrial Products sector are Crane Company CR and Applied Industrial Technologies AIT.
CR currently sports a Zacks Rank #1 (Strong Buy) and AIT carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Crane Company’s 2023 earnings per share is pegged at $4.18. The consensus estimate for 2023 earnings has remained unchanged in the past 60 days. The company has a trailing four-quarter average earnings surprise of 29.8%. Shares of CR have rallied 33.7% in a year.
Applied Industrial has an average trailing four-quarter earnings surprise of 15%. The Zacks Consensus Estimate for AIT’s 2023 earnings is pegged at $9.43 per share, which indicates year-over-year growth of 7.8%. Earnings estimates have moved up 4% in the past 60 days. The company’s shares have rallied 27.2% in a year.
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