Deere & Company (DE)

[DividendGarden]

Hello, friends. I have a new article up about Deere. I like the low valuation, strong dividend growth rates w/low payout ratios, and the buyback program is awesome.

Please check it out and let me know your feedback.

http://seekingalpha.com/article/2251323-...e-of-value

[DRILLINDK]

Headquarters is in my hometown so I'm a big fan of DE!

[Dividend Watcher]

Full up on DE but sure like those dividend increases. Yield's a little low for me but it doesn't take long with double digit dividend boosts to get the cash coming in to a sizable level.

Being a cyclical, I'm fully expecting a net income haircut in the next few years but with their low payout ratio and cash on hand, I think they'll weather it just fine.

[Slowlife]

Thought I'd bring this back rather than start a new thread. What do you think about DE laying of 460 employees? I like DE for their dividend growth rate and low payout ratio, but I am a little concerned about earning growth with declining demand. I think the layoffs will help the company in the long run and am seriously thinking about buying in here. I'm also a little confused because most of what I read shows people like the stock, but the price keeps going down. Would you or are you buying here and why?

[EricL]

(08-22-2014, 10:35 AM)Slowlife Wrote: Thought I'd bring this back rather than start a new thread. What do you think about DE laying of 460 employees? I like DE for their dividend growth rate and low payout ratio, but I am a little concerned about earning growth with declining demand. I think the layoffs will help the company in the long run and am seriously thinking about buying in here. I'm also a little confused because most of what I read shows people like the stock, but the price keeps going down. Would you or are you buying here and why?

Deere is a cyclical company and right now the stock is lower because of fears of a bottoming of the agriculture equipment replacement cycle due to a potentially record corn crop. The anticipation of the big crop has caused the price of corn to drop by roughly 35% in the last year and more than 50% from its recent highs. Other crops like soybeans and wheat have also dropped in price.

So what you have is a high quality company with a long history of growth seeing a temporary hiccup due to the macro conditions of expected lower farm income.

Personally, I think the long term future for Deere will be just fine, but earnings will be hurt in the next 6-12 months, which is why the stock has sold off and currently has a PE ratio of around 10. Other than the big drop due to the 2008/2009 recession, Deere hasn't seen a dividend yield over 2.5% since late 2001. With the yield currently at about 2.8%, I think this is a nice place to start a position.

The world will always need food and farmers will always need equipment to grow it. The company was smart in cutting staff to save costs in the current environment. Long term I like the stock and own it.

I currently have a full position with my most recent buy being last July at $82.65, and the price is getting close to that point once again. The stock would yield 3% at $80 per share, and I think I may get interested in adding more again around that price.

[Turvok]

I actually just started a position in DE this week. I think the bottom has been around 83-83.5 the past few weeks, so as it was falling through $85.50 is where I started my position. It's a shame it kept falling a little more to $84.75, but oh well, I plan to hold it for quite some time. I agree agriculture is a cyclical and there will be times of sell-offs. This is one to be cliche and quote Buffet, "Be greedy while others are fearful and fearful when others are greedy."

[ronn38]

I just started a position with 60 shares when it dipped below $84 today. I think it a strong entry point for a long term hold.

Ronn

[daat99]

I'm going after DE on my taxable account using put options strategy.

I currently have a short 19/09/2014 put at strike 85.
If this will get assigned than I'll own 100 shares for effective price (after commissions) of $81.25.

If this won't get assigned than I earned $375 (after commissions) on DE between 16/07/2014 and 19/09/2014 without even buying it.
When I started to sell puts on it it was traded for ~89 which means I will have 4.2% in 2 months.

[ronn38]

Bravo data!

[alexg]

Deere definitely look enticing, but are we at peak earnings in a cycle?

[Kerim]

The only thing I don't really like about DE is the (relatively) low initial yield, and even that is not so bad. I don't mind its cyclical nature, and on the other important dividend growth metrics it looks pretty solid:

A decade-long streak of raising the dividend
A nice low P/E ratio of around 10
A low payout ratio of around 25 percent
Dividend growth that has averaged around 13 percent over the past 5 years, and a little over 11 percent in each of the past 2 years
Very solid EPS growth over the past 5 years.

Yes, I don't like to see 2014 earnings lower than 2013, but this is a cyclical company, and it comes with the territory. And the decrease is not all that large, really.

Importantly, the new 2015 guidance is lower too. Does this spell doom for the company? Nope. Does it spell a solid dip to a better entry point? We'll see. I opened a small position in Deere in 2013 at under $85 per share. And prices have dipped into the low $80s several times in the past 2 years. So I might wait for those prices again, but would not hesitate to add.

Other opinions?

[Roadmap2Retire]

While not a shareholder in DE, I watch their earnings and forward projections as it gives me a good perspective on the sector (I own some other ag names like ADM and AGU).

Heres the economic outlook from Deere:
http://www.businessinsider.com/john-deer...14-11?op=1