1. Investment Thesis
Deere & Company (“Deere”) maintains an impressive 52-year track record of uninterrupted dividend payments, supported historically by strong operating performance. However, current financial stresses including negative free cash flow, low liquidity, and high leverage present a material risk to dividend sustainability.
Deere’s dividend yield of 0.31% is significantly below both industry and peer averages, reducing its attractiveness for income-oriented strategies.
➔ Overall Thesis: Deere’s dividend profile has shifted from a “buy-and-hold” income asset to a “monitor closely” status.
2. Dividend and Financial Highlights
| Metric | Value | Commentary |
|---|---|---|
| Dividend Yield | 0.31% | Below industry avg. (2.68%) |
| Dividend Growth (5Y CAGR) | 16.34% | Strong historic growth |
| Dividend Consistency | 52.6 years | Highly reliable |
| Annual Dividend | $6.18 | Growing steadily |
| Dividend Coverage (FCF) | Negative | Severe risk – not covered by FCF |
| Cash Ratio | 0.08 | Extremely low |
| Net Debt | $58B | High leverage relative to equity |
| DRS Score | 32.31 (“At Risk”) | Very concerning |
3. Peer Comparison
| Company | Dividend Yield (%) | Score |
|---|---|---|
| Deere (DE) | 0.31% | 58 |
| AGCO | 4.63% | 52 |
| PCAR | 4.27% | 54 |
| CNHI | 4.10% | 48 |
| CAT | 1.84% | 53 |
➔ Comment:
Deere’s dividend yield is the lowest among major peers, despite scoring slightly higher on broader financial metrics. Peer companies like AGCO and PCAR offer better yields and similar operational scores.
4. Insider Sentiment
| Metric | Value | Comment |
|---|---|---|
| Sentiment Grade | Cautious | Improvement in Q1 2025 |
| Trend | Up | Net buying observed |
| Q1 2025 Insider Activity | 11 purchases vs 4 sales | Positive shift |
➔ Comment:
Insiders are signaling moderate confidence through buying activity, but sentiment remains cautious, not aggressive.
5. Dividend Resilience (DRS) Component Risk Breakdown
| Component | Risk Level |
|---|---|
| Free Cash Flow Coverage | 🔴 Critical |
| Payout Ratio | 🟠 Moderate |
| Cash Ratio | 🔴 Critical |
| Debt-to-Equity | 🔴 Critical |
| Interest Coverage | 🔴 Critical |
➔ DRS Score: 32.31 (“At Risk”)
➔ Comment:
The core financial stress points are cash flow weakness and high leverage.
6. Strategic Recommendation
| Recommendation | Status |
|---|---|
| Dividend-focused Investors | ❌ Avoid new positions |
| Growth-focused Investors | ⚠️ Hold with Caution |
| Reinvestment Decision | ❌ Do Not Reinvest Dividends |
➔ Summary:
Given the significant dividend risks, no new income-focused positions are advised. Growth investors may retain exposure selectively, closely monitoring cash flow and leverage trends.
📢 Final Investment View:
“Deere remains a financially resilient industrial name over the long term but currently carries substantial dividend risk. Active monitoring is essential. Not suited for fresh income-focused investments at this time.”
🔵 Structured Add-on Options:
If you want, I can also prepare:
- 📊 Peer Benchmarking Table (full metrics: yield, payout, debt-to-equity, free cash flow, score)
- 📑 Dividend Coverage and Liquidity Matrix (visual risk dashboard)
- 📈 Historical Dividend Growth Graph (1Y / 3Y / 5Y CAGR visualization)
Would you like me to generate one of these for you next?
(Just tell me which one you want — you can pick multiple!) 🚀
4o
You said:
All 🙂
ChatGPT said:
Excellent, let’s move step-by-step and build a full Professional Investment Dossier!
Since you asked for all, here’s the plan:
I’ll generate, one after another:
- 📊 Peer Benchmarking Table – full financial comparison
- 📑 Dividend Coverage and Liquidity Matrix – a visual style risk dashboard
- 📈 Historical Dividend Growth Graph – simple and clean CAGR visualization
📊 1. Peer Benchmarking Table – Full Comparison
| Company | Dividend Yield (%) | 5Y Dividend CAGR (%) | Payout Ratio (%) | Debt-to-Equity (%) | Free Cash Flow Coverage | Score |
|---|---|---|---|---|---|---|
| DE(Deere) | 0.31 | 16.34 | 46.38 | N/A | Negative | 58 |
| AGCO | 4.63 | N/A | N/A | N/A | N/A | 52 |
| PCAR | 4.27 | N/A | N/A | N/A | N/A | 54 |
| CNHI | 4.10 | N/A | N/A | N/A | N/A | 48 |
| CAT | 1.84 | N/A | N/A | N/A | N/A | 53 |
| WNC | 3.18 | N/A | N/A | N/A | N/A | 53 |
| TEX | 1.90 | N/A | N/A | N/A | N/A | 54 |
| OSK | 2.13 | N/A | N/A | N/A | N/A | 53 |
➔ Observation:
While Deere beats peers in dividend growth, its dividend yield is the lowest.
Critical issue: free cash flow is negative, making the payout unstable compared to peers.
📑 2. Dividend Coverage and Liquidity Matrix – Risk Dashboard
| Metric | Deere (DE) | Risk Level | Commentary |
|---|---|---|---|
| Free Cash Flow Coverage | Negative | 🔴 Critical | Dividend not funded by FCF |
| Payout Ratio | 46.38% | 🟠 Moderate | Below 90%, acceptable |
| Cash Ratio | 0.08 | 🔴 Critical | Very low liquidity |
| Debt-to-Equity | High / N.A. | 🔴 Critical | Debt heavy, equity thin |
| Insider Sentiment | Cautious (Uptrend) | 🟡 Watch | Buying increased, but cautious |
| Dividend Growth (5Y CAGR) | 16.34% | 🟢 Strong | Solid long-term growth |
➔ Conclusion:
Deere’s dividend quality rests on strong growth history but is threatened by liquidity collapse and debt burden.
📈 3. Historical Dividend Growth – Graph Summary
| Period | Growth (%) | Commentary |
|---|---|---|
| 1 Year | 10.20% | Recent growth despite pressure |
| 3 Year | 15.55% | Accelerated mid-term growth |
| 5 Year | 16.34% | Consistent long-term strength |
