A Decade of Rewards: Caterpillar Stock Returns $57 Bil to Investors

In the last decade, Caterpillar (CAT) stock has returned a notable $57 Bil back to its shareholders through cold, hard cash via dividends and buybacks. Let’s look at some numbers and compare how this payout power stacks up against the market’s biggest capital-return machines.

As it turns out, CAT stock has returned the 47th highest amount to shareholders in history.

Why should you care? Because dividends and share repurchases represent direct, tangible returns of capital to shareholders. They also signal management’s confidence in the company’s financial health and ability to generate sustainable cash flows. And there are more stocks like that. Here is a list of the top 10 companies ranked by total capital returned to shareholders via dividends and stock repurchases.

Single stock can be risky, but there is a huge value to a broader diversified approach. If you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio (HQ) – HQ has outperformed its benchmark – a combination of S&P 500, Russell, and S&P midcap index, and achieved returns exceeding 91% since its inception. Risk management is key – consider, what could long-term portfolio performance be if you blended 10% commodities, 10% gold, and 2% crypto with HQ’s performance metrics.

Top 10 Stocks By Total Shareholder Return

For full ranking, visit Buybacks & Dividends Ranking

What do you notice here? The total capital returned to shareholders as a % of the current market cap appears inversely proportional to growth prospects for reinvestments. Stocks like Meta (META) and Microsoft (MSFT) are growing much faster, in a more predictable way, compared to the others, but they have returned a much lower fraction of their market cap to shareholders.

That’s the flip side to high capital returns. Sure, they are attractive, but you have to ask yourself the question: Am I sacrificing growth and sound fundamentals? With that in mind, let’s look at some numbers for CAT. (see Buy or Sell Caterpillar Stock for more details)

Caterpillar Fundamentals

• Revenue Growth: -4.9% LTM and 5.8% last 3-year average.
• Cash Generation: Nearly 12.3% free cash flow margin and 18.2% operating margin LTM.
• Recent Revenue Shocks: The minimum annual revenue growth in the last 3 years for CAT was -4.9%.
• Valuation: Caterpillar stock trades at a P/E multiple of 24.9
• Opportunity vs S&P: Compared to S&P, you get higher valuation, higher 3 year average revenue growth, and lower margins

*LTM: Last Twelve Months

That’s a good overview, but evaluating a stock from an investment perspective involves much more. That is exactly what Trefis High Quality Portfolio does. It is designed to reduce stock-specific risk while giving upside exposure.

CAT Historical Risk

That said, Caterpillar isn’t immune to big drops. It fell about 52% in the Dot-Com crash and took an even steeper hit of 73% in the Global Financial Crisis. The 2018 correction and Covid pandemic both pushed it down around 33% to 39%. The recent inflation shock wasn’t minor either, trimming roughly 32%. Solid fundamentals matter, but when the market turns, CAT has shown it can still take a serious hit.

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read CAT Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

The Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.