Cat increases dividend: CEO optimistic about future
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- Published on Wednesday, 10 June 2015 16:46
- Written by Paul Gordon
Caterpillar Inc.’s board of directors voted Wednesday to increase the quarterly cash dividend by 10 percent, bringing the rate to 77 cents per share of common stock, the company announced. The vote came while the board was in Wamego, Kansas for Caterpillar’s Annual Meeting of Shareholders.
The new dividend will first be payable Aug. 20 to shareholders of record at the close of business on July 20, the company said.
"This 10 percent dividend increase is another example of our commitment to deliver superior returns to stockholders through the ups and downs of the industries we serve. Our strong balance sheet, cash flow and operational performance have put us in a position to reward stockholders with a higher dividend again this year," said Doug Oberhelman, Caterpillar chairman and CEO. "The increase is consistent with our cash deployment priorities – maintaining financial strength, funding growth, appropriately funding pension/benefit plans, paying dividends and repurchasing stock.
"Today's announcement demonstrates a commitment to stockholders that goes back to 1925. I am proud that, despite periods of business and economic uncertainty, Caterpillar has paid a cash dividend to stockholders every year since the company was formed in 1925 and has paid a quarterly dividend since 1933. We've paid higher annual dividends to stockholders for 21 consecutive years, and the cash dividend has more than doubled since 2006. I am equally proud that our equipment and services have helped build, grow and power the world for over 90 years," Oberhelman added.
Since the beginning of 2013, Caterpillar has returned more than $10 billion in capital to its stockholders through dividend payments and stock repurchases.
In a speech to shareholders at the annual meeting, Oberhelman touted the company’s innovative practices throughout its 90-year history. Noting the cliché “think outside the box,” Oberhelman said what Caterpillar does is, “when we talk about innovation we don’t think outside the box: We think inside and outside the machine.”
He continued, “When I say machine, I’m talking about everything that digs, powers, builds, crushes, cuts and operates. It’s every product we sell, every service we provide, and everything in between. For 90 years, Caterpillar has designed, built and delivered breakthrough innovations inside our machines and engines – from the track-type tractor that gave us our Caterpillar name, to the diesel engine, the elevated sprocket, the hybrid excavator and dynamic gas blending, just to name a few.
“In fact, Caterpillar founders Benjamin Holt and C.L. Best, two men from Northern California, were inventing and creating long before other Californians, like Hewlett and Packard, or Jobs and Wozniak, were born. And long before there was HP or Apple, Holt and Best’s inventions were the foundation of Caterpillar, a company that for almost a century has helped build, develop and power the world. We have an incredible legacy.”
Oberhelman then discussed his view of Caterpillar’s future, one he said will be filled with innovative products and services.
“We currently invest more than $2 billion each year on research and development. We’re developing and testing new products at R&D centers in the United States, the United Kingdom, India and China; and at proving grounds in North America and Asia. We’re developing advanced technologies through partnerships with universities, non-profits and government agencies – including NASA and the Department of Defense. That’s how we think about innovation inside the machine,” he said.
Innovation outside the machine, he added, “means thinking beyond the yellow iron – and these innovations fall into three main buckets: How we use data; how we adapt and develop new business models; and how we operate internally.”
Caterpillar, he said, “goes beyond the Internet of things – to the Internet of big things.” He then listed many ways in which Caterpillar is using data and developing data analytics to help the company and its customers.
“All across our company, we are driving down operating costs and increasing uptime for our customers by turning big data into valuable, actionable information. We’re investing in companies that think and act differently than we do. That’s intentional and it’s new for Caterpillar. We are trying to disrupt ourselves in our own way, before others can disrupt us. And while our enterprise business model – seed, grow, harvest – remains our core, we recognize that industry boundaries and business models are changing. We will lead those changes where ever we can,” he said.
He spoke of internal innovation, listing as an example the company’s Assurance of Supply Center. “It’s one of the most comprehensive visibility tools in the world. It simplifies our supply network, a network that involves thousands of suppliers shipping more than a million parts and components every year. Now, we can see those orders from production to delivery – by facility, business unit and cost. That’s just one way we’re going to reach our goal of right part, right time,” he said.
Oberhelman said the Caterpillar of today is a “mighty and diverse force. Think about how that diversity makes us strong now, and will make us even stronger in the future. From that diversity will come even greater innovation; innovation that meets our customers’ – and the world’s – needs.
“Innovation is Caterpillar’s promise to our stockholders, our customers and our employees. It’s how we will keep our 90-year old company forever young and strong.”
