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Learning From Your CAT

Powering Up in a Down Market?  These Guys Are Good.

Now, don’t zone out on me, here.  This is a heck of a story.  Caterpillar was supposed to be dead.  Instead, in this sloppy market, they’re paying a higher dividend:

Caterpillar announced a 5% dividend increase on 6/9/2010, moving the August 20 distribution from $0.42 per share to $0.44 per share (for shareholders of record on July 20.)

Still with me?  Paying out a bigger dividend isn’t just a nice way to get rid of all that spare money.  Exactly one day earlier, Caterpillar released their updated Vision 2020 Strategy.  The goals and strategy are, shall we say, aggressive.

To me, the Strategy said, “We’re going to dominate.”  The dividend boost said, “And we’ve got the power to do it.”

If you want to see how a winning team addresses a murky market and an indecisive future, just read the Press Release. It’s pretty invigorating:

Caterpillar Announces Updated Strategy

Wait, Wasn’t Everything Slowing Down?

We’ll skip over the stories about how terrible everything in the world is supposed to be, and simply observe here that CAT stock is up 100% from July last year.  

If there’s construction somewhere in the world, CAT is making it clear they want to be a part of it. Sales have rebounded, and seem to be headed higher.

Remember Onshoring?

Here’s how serious Caterpillar is: This is a link to a story in the Arkansas News:

Caterpillar plant, 600 jobs bound for North Little Rock

That plant is about ready to come on line today. The article is dated January, 2009. Back then, we were already in our economic death spiral.

Scrimping and Investing At The Same Time

The January 5 article not only talks about the North Little Rock facility as the “jewel in Caterpillar’s crown.” It also mentions that two short weeks before this announcement, Caterpillar took drastic cost cutting measures, including reducing “salaries by up to 50 percent for executives, 5 percent to 35 percent for senior managers and up to 15 percent for other management and support staff.”

Dealing With It

This is a company that doesn’t play around. You may remember, hours after the Health Care Legislation was passed, Caterpillar was one of the first to take a charge. A $90 million dollar charge. There’s no thumb sucking in the corporate offices.

Where’s The Action?

Just in case you don’t fill your day reading quarterly reports, you might be interested that CAT is prowling Latin America and Asia for its biggest action. Best industries are mining and energy.

If you do like reading stuff like that, we’ll just try to keep it our own little secret. Nevertheless, here’s a link to the financials in Caterpillar’s investor’s section:

Caterpillar Quarterly Results

www.dieck.us

Posted in Companies, Reviewed.


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