Updated on February 4th, 2025 by Felix Martinez
Each year, we individually review each of the Dividend Aristocrats, a group of 69 stocks in the S&P 500 Index that has raised their dividends for at least 25 consecutive years.
To make it on the list of Dividend Aristocrats, a company must possess a profitable business model with a valuable brand, global competitive advantages, and the ability to withstand recessions. This is why Dividend Aristocrats can continue raising dividends in difficult years.
With this in mind, we have created a list of all 69 Dividend Aristocrats.
You can download your free copy of the Dividend Aristocrats list, along with important financial metrics such as price-to-earnings ratios and dividend yields, by clicking on the link below:
Disclaimer: Sure Dividend is not affiliated with S&P Global in any way. S&P Global owns and maintains The Dividend Aristocrats Index. The information in this article and downloadable spreadsheet is based on Sure Dividend’s own review, summary, and analysis of the S&P 500 Dividend Aristocrats ETF (NOBL) and other sources, and is meant to help individual investors better understand this ETF and the index upon which it is based. None of the information in this article or spreadsheet is official data from S&P Global. Consult S&P Global for official information.
Caterpillar Inc. (CAT) joined the Dividend Aristocrats list in 2019. Even more impressive is the fact that Caterpillar operates in a highly cyclical industry, which normally prevents companies from attaining long histories of annual dividend increases.
However, Caterpillar’s management team has proven its commitment to returning cash to shareholders even through the inevitable ebbs and flows of the business over the years. Caterpillar also has durable competitive advantages that allow it to raise its dividend each year, even through downturns in the global economy.
Business Overview
Caterpillar was founded in 1925 and today competes in the manufacturing and selling of construction and mining equipment. The company also manufactures ancillary industrial products such as diesel engines and gas turbines. Caterpillar stock has a market capitalization of ~$174 billion, making it one of the largest industrial stocks in the world.
Industrial manufacturers benefited from strong demand in 2022 and 2021, which fueled growth and spurred global economic activity off the low base established in 2020 amid the pandemic.
On January 30th, 2025, Caterpillar reported its financial results for the fourth quarter and full year of 2024, showing a decline in sales and revenues compared to 2023. Fourth-quarter revenue was $16.2 billion, a 5% decrease from the previous year’s $17.1 billion. Profit per share for the quarter rose to $5.78 from $5.28 in 2023, while adjusted profit per share dropped slightly to $5.14. The company’s operating profit margin was 18.0%, down from 18.4% in the previous year, reflecting a challenging market environment.
Caterpillar’s sales and revenues totaled $64.8 billion for the full year, a 3% decline from 2023, primarily due to lower sales volumes. However, the company maintained strong profitability, with an operating profit margin of 20.2%, up from 19.3% in 2023. Full-year profit per share increased to $22.05 from $20.12, while adjusted profit per share rose to $21.90 from $21.21. The company attributed these results to strategic pricing and operational efficiency, which helped offset declining equipment sales.
Caterpillar generated $12.0 billion in operating cash flow in 2024 and ended the year with $6.9 billion in cash. The company continued its commitment to shareholder returns, deploying $7.7 billion for stock repurchases and $2.6 billion for dividends. Chairman and CEO Jim Umpleby praised the team’s strong performance, highlighting record adjusted profit per share and robust cash flow. As Caterpillar enters its centennial year, it remains focused on executing its strategy and investing in long-term growth.
Source: Investor Presentation
Growth Prospects
Caterpillar is closely tied to global economic growth and commodity prices. Its customers extract resources from the earth and build and construct a wide variety of structures, so economic growth is key to funding that development.
This leads to some fairly extreme cyclicality in Caterpillar’s results, which sees the stock swing wildly between extremes of the sentiment scale.
The coronavirus pandemic weighed heavily on the company, but the global economic recovery that ensued enabled Caterpillar to become highly profitable in 2021 and 2022. Caterpillar is offsetting increased manufacturing costs with increased pricing.
We are forecasting $21.00 in earnings-per-share for 2025 to go along with a 5% growth rate over the next five years.
This reflects both some caution with regard to the cyclical nature of the business and Caterpillar’s ability to bounce back when demand returns.
Source: Investor Presentation
Competitive Advantages & Recession Performance
Competitive advantages in industrial applications can be challenging, given that some competitors make similar products for most applications.
However, over the years, Caterpillar has become one of the most significant players in lucrative end markets such as construction, energy, and mining.
Its global presence affords it some diversification of revenue by segment and industry, as well as geographically, which has served it well in recent years. Its scale also allows it to leverage down variable costs per unit, boosting margins.
However, Caterpillar is certainly not immune from recessions, as slowdowns in the global economy are generally accompanied by lower commodity prices and slowing construction spending.
These factors took a major toll on Caterpillar’s bottom line during the Great Recession, as its earnings were devastated, if only briefly.
Caterpillar’s earnings-per-share during the Great Recession are below:
- 2007 earnings-per-share of $5.32
- 2008 earnings-per-share of $5.71 (7% increase)
- 2009 earnings-per-share of $1.43 (75% decline)
- 2010 earnings-per-share of $4.15 (190% increase)
While Caterpillar certainly felt the pain from the Great Recession, its earnings rebounded fairly quickly and reclaimed its pre-recession earnings-per-share number in 2011.
Caterpillar also experienced a large decline in earnings-per-share in 2020 due to the coronavirus pandemic but recovered strongly since then in a short period of time.
Therefore, Caterpillar is clearly exposed to recessions due to the economic bellwether nature of the heavy machinery industry. But it also has a history of recovering from downturns fairly quickly.
Valuation & Expected Returns
Caterpillar’s current price-to-earnings ratio is 17.2x, based on the 2025 expected EPS of $21.00. This is an elevated valuation level for Caterpillar. Since 2013, shares of Caterpillar have traded with an average P/E ratio of about 17x. We believe 16.5x is a reasonable, fair value estimate for Caterpillar, given its cyclical business and vulnerability to recessions and the current rising rate environment.
Periods of cyclicality are normal for Caterpillar when it comes to valuation. Still, the stock appears to be just slightly overvalued. A declining P/E multiple could reduce future returns; if the P/E multiple declines from 17.2 to 16.5 over the next five years, it would lower annual returns slightly.
The other negative aspect of stocks with elevated valuations is that they also have lower dividend yields. As Caterpillar’s share price has risen in the past year, its dividend yield has declined to 1.6%. Dividends and earnings-per-share growth (expected at 3% per year) will add to shareholder returns, but the overvaluation of the stock is a hurdle to clear.
Based upon the factors discussed above, we see total returns of 6.2% per year. This leads us to rate Caterpillar a hold today.
Final Thoughts
Caterpillar stock continues its impressive rise, having increased over 30% in the past year compared to a 25% rise in the S&P 500 index. Results in 2025 are expected to be flat. While the stock is trading above its average PE and our fair value estimate, it is not severely overvalued.
Caterpillar has an industry-leading brand and a positive long-term growth outlook, but we feel the stock has simply become overpriced due to the rally since the pandemic lows. With a mid-single digit expected future return, we rate the stock a hold. Investors may be better off waiting for a decline in the share price.
Further reading: See analysis on our favorite agriculture stocks.
Additionally, the following Sure Dividend databases contain the most reliable dividend growers in our investment universe:
- The Dividend Contenders List: 10-24 consecutive years of dividend increases.
- The Dividend Challengers List: 5-9 consecutive years of dividend increases.
- The Dividend Champions: Dividend stocks with 25+ years of dividend increases, including those that may not qualify as Dividend Aristocrats.
- The Dividend Achievers: dividend stocks with 10+ years of consecutive dividend increases.
- The Dividend Kings: considered to be the ultimate dividend growth stocks, the Dividend Kings list is comprised of stocks with 50+ years of consecutive dividend increases
If you’re looking for stocks with unique dividend characteristics, consider the following Sure Dividend databases:
- The Complete List of Monthly Dividend Stocks: stocks that pay dividends each month, for 12 payments over the year.
- The Blue Chip Stocks List: this database contains stocks that qualify as either Dividend Achievers, Dividend Aristocrats, or Dividend Kings.