03-27-2014, 10:06 PM
(03-26-2014, 01:15 PM)Jason Wrote: If they do struggle in the next couple of years I wonder if they will be
willing to increase the payout ratio. Right now it looks like they want to keep it around 25 to 35%. Looks like the share repurchase is cyclical as well.
That's because the whole business is cyclical, IMO. I doubt very much they'll boost the payout ratio. During the last 2 recessions earning were cut about in half. If that happens again, the payout ratio will be closer to 50-60% at today's indicated dividend rate.
I'm looking out 5 years and beyond so what happens over the next couple years does not concern me that much. When I purchased my stake, I expected 2013 to be the peak year and then drop for the next 2-3 years. Five years out, however, the growing population and rising middle class in the underdeveloped world are going to be clamoring for food. DE could be right in the middle of productivity gains in the ag field if management plays their cards right. CMI could also be a beneficiary of some of that.
CAT & CMI could benefit more from infrastructure buildout worldwide and rebuilding in the US if our politicians keep ignoring the crumbling infrastructure as they're doing now. However, this could take time to play out.
In the meantime, I'll just watch and reinvest. Not purchasing any more at these levels but may add during the expected dip.
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“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan
“While the dividend itself is merely a rearrangement of equity, over time it's more like owning an apple tree. The tree grows the apples back again and again and again, and the theoretical value of the tree doesn't change just because of when the apples are about to fall.” - earthtodan