A row of Caterpillar excavators are seen at a booth at the Las Vegas Convention Center in Las Vegas, Nevada, U.S. on March 9, 2017.David Becker/Reuters
Caterpillar Inc. will issue a record dividend for the second quarter, up 20 per cent from its previous payout, and plans to further increase returns to shareholders over the next four years, the company said on Thursday ahead of its investor day.
The company said it is targeting at least high single-digit dividend increase in each of the next four years and plans to buy back shares more consistently.
The dividend of $1.03 per share will be paid on Aug. 20 to shareholders at the close of business on July 22, it said.
The company also forecast services revenue to increase to $28-billion by 2026 from $18-billion in 2018 .
The services business, spread across the company’s construction, resource and energy & transportation units, contributed about 33 per cent to Caterpillar’s $54.7-billion revenue in 2018.
At its investor day, the company is expected to provide an updated overview of its long-term financial strategy.
Last week, Caterpillar spooked investors when it reported first-quarter results that showed rising costs hitting margins in its construction equipment business and weak sales in the Asia Pacific region linked to slow growth in China.
The company has raised prices to offset some of the higher costs and pushed efficiency moves at its far-flung network of factories.
Chief Executive Jim Umpleby is expected to highlight to investors plans to reduce earnings volatility by selling more parts and services. Caterpillar’s main customers are in businesses like mining and construction, which are prone to wide swings along with the business cycle.