John Deere(US:DE) ZACKS·2025-09-08 15:06Core Insights - Deere & Company (DE) stands out in the Manufacturing - Farm Equipment industry with a dividend yield of 1.37%, surpassing the industry average of 1.20% [1] - The company has consistently increased its dividends since resuming growth in 2020, with a five-year dividend growth rate of 18% [2] - Despite facing sales declines and negative earnings growth, Deere has maintained a strong shareholder return strategy through regular dividend increases and share repurchases [3][4] Dividend and Shareholder Returns - Deere raised its quarterly dividend by 10% to $1.62 per share, marking the eighth increase in five years and more than doubling the payout from 76 cents [2][11] - In fiscal 2023, Deere returned $8.6 billion to shareholders, representing 73% of cash flow from equipment operations, with continued momentum into fiscal 2024 and 2025 [3] - The current payout ratio of 33.09% is higher than the industry benchmark of 25.75%, indicating a strong commitment to rewarding investors [1] Financial Performance and Projections - For fiscal 2025, Deere expects net income between $4.75 billion and $5.25 billion, reflecting a year-over-year decline of approximately 30% [5] - Cash flow from equipment operations is projected at $4.5 billion to $5.5 billion, with capital expenditures budgeted at around $1.4 billion, allowing for sufficient free cash flow to cover dividends [5] - Earnings estimates for fiscal 2025 indicate a decline of 27.5%, while fiscal 2026 shows a potential recovery with a 12% growth forecast [14] Market Position and Valuation - Deere's stock has gained 11.7% year-to-date, outperforming the industry growth of 10.6% and the S&P 500's increase of 10.8% [12] - The company is currently trading at a forward P/E ratio of 23.10X, compared to the industry average of 21.27X [13] - Recent earnings estimates have been revised downward over the past 60 days, indicating potential challenges ahead [14]