Heavy equipment maker Caterpillar Inc. (CAT) raised its quarterly dividend by 17% this week, from $0.36/share to $0.42/share. CAT has impressively doubled their dividend since 2005, however their dividend growth history has not been as consistent as I would like it to be in order to add this stock to my watch list. For example, from July, 2000 to April, 2004 CAT's dividend grew from $0.170/share to $0.185/share, growth of a measly 2% per year. CAT's EPS (earnings per share) were actually higher in 1998 vs. 2003.
Obviously CAT is a cyclical company who benefits from large scale construction and mining activity but can be hit hard when the cycle turns and activity slows down. Overall I think CAT is a great company and a great brand, however I view the business model as not consistent enough for my long term dividend growth portfolio. The stock has had a massive run up since 2002 as their earnings have increased nicely. CAT currently yields about 1.8%.