Key Takeaways
- Caterpillar raised its quarterly dividend 8% in June, while Deere’s $1.62 quarterly dividend is the same as a year ago.
- Caterpillar’s dividend used 30% of its free cash flow over the past 12 months, against 54% for Deere.
- Deere grew its dividend faster from fiscal 2020 to fiscal 2025, by 16% a year to Caterpillar’s 8%.
- Caterpillar’s sales grew 17% last quarter, while Deere expects sales in its Production & Precision Ag business to fall about 10% this fiscal year.
Caterpillar (CAT) raised its quarterly dividend 8% to $1.63 a share on June 10, 2026, its sixth straight year of a high single-digit raise. Deere & Company (DE) declared $1.62 a share on Aug. 26, the same amount it paid a year earlier.
That’s a big split for two dividends that yield 1.1% and 1.0% today, especially since Deere grew its payout more than twice as fast as Caterpillar’s over the last five years. So if you put $10,000 into one of them today, which pays you more over the next 10 years?
| Metric | Caterpillar (CAT) | Deere & Company (DE) |
|---|---|---|
| Dividend yield | 1.1% | 1.0% |
| Annual dividend | $6.52 | $6.48 |
| Dividend growth, fiscal 2020-2025 | 7.6% a year | 15.8% a year |
| Cash dividend payout ratio (TTM) | 30% | 54% |
| Net debt / EBITDA (LTM) | 2.2x | 6.5x |
| Interest coverage (LTM) | 27.8x | 30.4x |
Source: TIKR and StockAnalysis, Nov. 9, 2026. TTM is the twelve months to Sept. 30, 2026, for Caterpillar and to Aug. 2, 2026, for Deere.
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Caterpillar has room to keep raising
Caterpillar’s sales rose 17% to $20.7 billion in the third quarter of 2026, from $17.6 billion a year earlier. Power & Energy sales grew 18% on demand for turbines, large engines and data center power, and the backlog hit a record $78 billion. Management expects full-year 2026 sales to grow in the mid- to high teens.
Over the twelve months to Sept. 30, 2026, the dividend used a comfortable 30% of free cash flow. Free cash flow has also topped dividends paid in every fiscal year from 2016 to 2025:
Caterpillar plans to keep returning substantially all the free cash flow from its machinery, power and energy businesses through dividends and buybacks. It spends more on buybacks than on the dividend: $1.2 billion in the third quarter, against $0.7 billion for dividends. So the dividend has room to keep growing even in a softer year. The board kept the rate at $1.63 in October, since Caterpillar raises once a year, and the company has paid higher annual dividends for 32 straight years.
The risk is slower growth. Third-quarter orders came to $25.6 billion, down about 11% from the second quarter, and management guided to moderate fourth-quarter sales growth. The stock fell 9% on Oct. 29, the day Caterpillar reported.
Deere’s dividend has hit pause
Deere’s dividend record looks stronger than Caterpillar’s. It grew 15.8% a year from fiscal 2020 to fiscal 2025, from $3.04 to $6.33 a share. But the $1.62 Deere declared for its third quarter of fiscal 2026 is the same as in the third quarter of fiscal 2025.
Deere’s third-quarter sales, in the quarter to Aug. 2, 2026, rose 5% to $12.6 billion. Construction & Forestry sales jumped 18% on infrastructure, data center and road building demand. Production & Precision Ag sales fell 6% as farmers in South America and Europe pulled back. CEO John May said Deere continues to believe “2026 will mark the bottom of the current ag equipment cycle.”
Over the twelve months to Aug. 2, 2026, Deere’s dividend used 54% of free cash flow, up from 36% in fiscal 2024. Its free cash flow has also been far bumpier than Caterpillar’s, falling short of the dividend in fiscal 2017, 2018, 2019 and 2022:
Deere expects $5 billion to $5.5 billion of cash flow from its equipment operations in fiscal 2026, so the dividend looks safe for now. Labor is the other risk. On Aug. 25, 2026, UAW members rejected a two-year contract extension, with the union pointing to the $1.7 billion Deere paid in dividends, and the current contract runs to fall 2027.
So which dividend wins?
I think Caterpillar pays you more over the next 10 years. At each stock’s five-year growth rate, $10,000 in Deere would pay about $2,111 in all, against about $1,563 for Caterpillar. At each dividend’s pace now, its latest fiscal year’s rise, Deere’s edge shrinks to about $36: about $1,586 against $1,550.
That edge assumes Deere raises its dividend 9.9% every year, but it hasn’t raised at all in the past year. Its payout has climbed to 54% of free cash flow, and its Production & Precision Ag business is shrinking. Caterpillar’s 8% raise in June is in line with its 7.4% rise in fiscal 2025, its payout is 30%, and its sales are still growing. I’d rather own the dividend that’s actually rising.
Deere still has a real case. Its interest coverage is the better of the two at 30.4x, Construction & Forestry is booming, and if management is right that 2026 is the bottom, raises could resume. But Caterpillar is raising its dividend today, from a smaller share of its cash, and over a decade I trust that more than Deere’s faster history.
Of course, Deere’s next dividend declaration matters a lot. If it brings a double-digit raise, the 10-year gap could swing back Deere’s way.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
