This agricultural equipment company is forecasted to grow 35% next year. The shares have a current annual dividend yield of 2.34%, paid quarterly.
Deere & Company (DE)
From Directinvesting.com
Founded in 1837 by John Deere, and headquartered in Moline, Illinois, Deere & Company is the world’s leading manufacturer of agricultural equipment, which operates through three business segments: Agriculture and turf, construction and forestry, and financial services. The company markets its products primarily through independent retail dealer networks and retail outlets. Its current total market capitalization of $45.5 billion makes DE a large capitalization stock (a large-cap stock has a market capitalization value of more than $10 billion) and its long history of consistent earnings growth and dividend payments makes it a solid company.
It is considered a well-diversified business with a wide economic moat and a sustainable competitive advantage over its rivals, which also enjoys outstanding management and corporate culture. According to Yahoo! Finance, consensus estimates call for the company to earn about $6.40 per share this year, and to go to about $8.64 per share in 2021. Deere & Company has paid dividends to investors since 1937, and during the past five years has increased its dividends at an average rate of 5.1%. Its quarterly payment of $0.76 per share currently provides a yield of 2.1%.
Technically (from the chart’s perspective) DE also looks attractive, trading 24.2% below its 52 weeks high, while it is forming a price consolidation pattern between $182 and $106 approximately, in which $106 is acting as a strong technical support level. The index funds Vanguard Total Stock Market Index and Vanguard 500 Index are major shareholders of DE, holding 2.91% and 2.04% of its shares, respectively. The stock is also one of the 63 holdings of the mutual fund managed by Moneypaper Advisors, the MP 63 Fund (DRIPX). DE’s main competitors in the world are Caterpillar Inc. (CAT) and AGCO Corp. (AGCO). DE’s Beta (a measure of the volatility, or systematic risk in comparison to the market as a whole as evidenced by the S&P 500® Index) is 1.05 so the stock is 5% more volatile than the Market.
Its Dividend Reinvestment Plan charges some fees for cash investing ($3, plus 5 cents per share), for dividend reinvestment (5% with a maximum of $3, plus 5 cents per share) and for selling ($10 plus 5 cents per share). To illustrate those fees: For example, a $100 investment at DE’s current price would cost a fee of $3.04 (or 3.04% of the investment). To minimize the effect of even such small fees, you may want to invest a larger amount but less frequently. The fee for a $300 investment, for instance, would be $3.11 (or 1.04% of the investment).
With the stock being fundamental and technically attractive, this company is an appropriate holding for investors who wish to build a holding over the long term.
Vita Nelson, www.directinvesting.com, 914-925-0022, May 4, 2020