By Davit Kirakosyan
Caterpillar Inc. (NYSE:CAT) shares closed more than 1% higher, while the broader market fell about 1% after the company announced its Board of Directors voted to increase the quarterly cash dividend by 8% to $1.20 per share of common stock. The dividend is payable on August 19, to shareholders of record at the close of business on July 20. The ex-dividend date will be July 19.
This year's increase was roughly in-line with last year's 7.8% dividend hike.
"Our dividend increase reflects our strong balance sheet and liquidity position as well as confidence in continued strong free cash flow generation from Machinery, Energy & Transportation (ME&T)," said Caterpillar Chairman and CEO Jim Umpleby. "We intend to return substantially all ME&T free cash flow to shareholders over time through dividends and share repurchases."
Caterpillar has paid higher annual dividends to shareholders for 28 consecutive years and is a member of the S&P 500 Dividend Aristocrat Index.
Based on the closing price, the new dividend yields 2.1% annually.