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Is Caterpillar A Good Choice For A Buy And Hold Investor?

Feb. 07, 2019 9:08 AM ETCaterpillar Inc. (CAT)37 Comments
Scott Wilkie profile picture
Scott Wilkie


  • I like companies that are solidly grounded in the developed economies yet have the presence and scale to take advantage of emerging markets.
  • We live in a world desperate for new infrastructure and CAT is well positioned to take advantage of this trend.
  • A healthy and growing dividend at an attractive entry point.

When I look at an investment, I am looking at the company from the standpoint of wanting to purchase a great company at an attractive entry point that is paying a quality dividend that they will be able to grow over time. I am not as interested in timing the market as much as buying and holding forever knowing that every quarter I am going to get paid and I will be able to sleep well at night. With that said, is Caterpillar (NYSE:CAT) the kind of company that I would want to hold in my portfolio?

Company overview

Source: Investor Presentation

2018 was a great year for Caterpillar returning record adjusted profits per share of $11.22 vs. $6.88 in the previous year. Sales revenues rose by 20% in the year and the company finished with a strong cash position of $7.9 billion. During the year, the company used their strong cash flows to repurchase $3.8 billion in shares while increasing their dividend by more than 11.5% rewarding shareholders. Looking ahead, the company is forecasting increases in sales in 2019 to power a per share profit increase of between 5-14% supporting future dividend increases and more share buybacks as free cash flow continues to accelerate.

When I am looking for an investment

What intrigues me most about CAT is that they are a global company and a bellwether indicator of the worldwide economy. Divided into 3 main divisions, Construction Industries, Resource Industries and Energy & Transportation, the company reflects what is going on within the industrial sector. Also important is their global reach with manufacturing facilities and distributors around the world. Their operations segments are divided globally as North America, Latin America, Europe Africa Middle East EAME and Asia Pacific.

The reason I like to look for companies with global

This article was written by

Scott Wilkie profile picture
Having achieved the dream of retiring early as a high net worth investor my job is managing my portfolio of high quality dividend paying stocks and supporting readers of Seeking Alpha. I have a special focus on Canadian large caps including: banks, insurance companies, pipelines, renewable energy, real estate, railways and the energy sector. A buy and hold investor I manage a focused portfolio of Canadian companies with an internationally diversified business model. Feel free to follow me as I pass along the knowledge I have earned and try to navigate my early retirement lifestyle..

Analyst’s Disclosure: I am/we are long CAT. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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