Nothing is a safe bet, though Deere & Company (NYSE: DE) it has looked promising despite countless economic and other challenges. The company predicted that it would produce net revenues of between $ 6.5 billion and $ 7 billion in fiscal year 2022. But is that a sufficient reason to invest in the name it traced the course of the current agricultural team?
Let’s take a look at the history of Deere & Company and the pros and cons of adding stocks to your dividend investment stack. Doing your own research can help you decide if you want to invest in Deere & Co. and determine if it will offer you the best return on dividend shares to achieve your goals.
History of Deere & Company
John Deere, who moved from Vermont to the Midwest, settled as a blacksmith in Grand Detour, Illinois, in the 1830s. He noticed that settlers had trouble taming the prairie soil. He whipped a broken Scottish steel saw blade into a piece of wood to create a plow and thus created a business that still bears his name. By 1849, he had produced 2,000 plows with these steel saw blades, which could plow the prairie soil of the Midwest without gluing.
In 1912, the company began to expand into tractors. In 1947, John Deere launched its first self-propelled combine, the Model 55. The 1960s and 1970s saw technological changes that forced farmers to cultivate more land for profit. Deere focused on agricultural equipment for large-scale agriculture: large tractors, balers and sowing and harvesting machinery.
Since then, the company has expanded beyond agricultural equipment, creating industrial, construction and forestry equipment in the United States, Canada, Europe, India, Argentina, Brazil and South Africa. It works through four segments:
- Precision production and agriculture: This division produces medium-sized tractors, combine harvesters, cotton harvesters, sugar cane harvesters, farming equipment and more.
- Small agriculture and lawn: This division produces utility tractors, loaders and accessories, lawn mowers, lawn mowers, commercial mowing equipment, utility vehicles and more.
- Construction and Forestry: This division produces backhoes, bulldozers and loaders, excavators, graders, skid steer loaders, log harvesters, road construction equipment and more.
- Financial services: The Financial Services division produces, sells and rents equipment for agriculture, lawn, construction and forestry and also offers wholesale financing to distributors.
The Moline, Illinois-based company has begun to expand into machine learning, applying it to agriculture as well. For example, Deere & Company acquired Blue River Technology in September 2017, which reduces herbicides by spraying only where there are weeds.
For the second quarter ended May 1, 2022, Deere & Company posted net income of $ 2.098 billion compared to net income of $ 1.790 billion on May 2, 2021. Sales and net income they increased 11% to $ 13.37 billion in the second quarter of 2022. and for six months, it increased 8% to $ 22.939 billion. Net sales were $ 12,034 million during the quarter and $ 20,565 million over six months, compared to $ 10,998 million and $ 19,049 million last year.
While historical results never guarantee future results, it is also important to consider the history of the company in which you plan to invest. It can tell you a lot about a particular business and help you decide whether or not to invest.
Pros and cons of Deere & Company
Why would you want to invest in Deere & Company and why would you want to consider just keeping an eye on it? Let’s take a look at the pros and cons of investing in Deere & Company shares.
- Quality synonymous brand: A household name, Deere & Company has cornered several markets as an international rock star. It offers some of the best equipment options in the industry and has a wide range of specialized equipment, such as lawn tractors, balers, combine harvesters and loaders.
- Research & Development: Deere spends substantial amounts on research and development, resulting in top-notch products and products that have strong resale value. It is safe to assume that strong R&D will continue to benefit the company, given what it is doing in the area of smart farming solutions, which helps farmers make decisions about when to plant and harvest; drought management, which helps farmers learn more about the risk of drought through satellite data; and autonomous tractors, which the company seeks to continuously improve.
- Maximum records: For the past year and throughout 2022, Deere & Company has only reported good numbers and good guidance. Its dividend yield currently stands at 1.45% with an annual dividend of $ 4.52, a dividend yield of 1.52% and a dividend payment ratio of 23.58%.
- Competition: Deere & Company has to keep an eye on its back because it is not the only one that produces agricultural machinery. It has formidable competition from Gehl, Husqvarna Group, Caterpillar Inc., AGCO, Toro Company, Mahindra, CNH Industrial, Kubota, Claas and more.
- These are not the best dividend stocks in the field: Speaking of competition, Deere & Company has competition when it comes to dividends. For example, Caterpillar pays an annual dividend of $ 4.44 per share and has a dividend yield of 2.5%, while Deere offers $ 4.52 per share with a dividend yield of 1.5%. What about earnings versus dividends? In this case, Caterpillar pays 37.2% of its dividend earnings, while Deere pays 23.6% of its dividend earnings. A more revealing sign is Caterpillar’s dividend increase for 29 consecutive years compared to Deere & Company’s increase of just two consecutive years. Higher yields and longer dividend growth point to Caterpillar as the best dividend selection if you’re looking for a good payer.
Is Deere & Company a good selection of dividends?
It’s important to recognize that Deere & Company isn’t the only decent dividend selection. (See the 6 best dividend stocks of all time.) Between a world of competitors and a revealing blow to the price of its shares this year, Deere & Company has its struggles and its high points, as have many of its competitors.
It is a good idea to evaluate your goals against the qualities (highs and lows) of the company you plan to invest in.