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Q3 earnings season is here, and three recent dividend announcements show how boards are feeling. An investment bank kept its payout flowing through a strong quarter.
A semiconductor giant printed a record year without blinking. And a European bank just handed shareholders the biggest interim check in its history.
Let's get into it.
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Industrials
Caterpillar Is Putting $1 Billion Behind a Faster-Growing Equipment Business
Caterpillar Inc. (NYSE: CAT) plans to invest about $1 billion in North Carolina to expand production of its compact construction equipment, including a new manufacturing facility in Sanford. The investment will increase capacity for products such as compact track loaders and telehandlers as demand from contractors and smaller businesses continues to grow.
The move gives Caterpillar another way to expand beyond the giant mining trucks, excavators, and heavy machinery most closely associated with its brand. Smaller equipment can reach a broader customer base across construction, landscaping, agriculture, and property work.
More Capacity Shows Caterpillar Expects Demand to Last
Building new manufacturing capacity is a longer-term commitment than simply increasing production at an existing plant. Caterpillar is effectively preparing for compact equipment to become a more important part of its growth mix.
Look beyond the size of the machines, and you can see why the category matters. A wider customer base gives Caterpillar more places to sell equipment without depending entirely on major mining, infrastructure, or industrial projects.
The Business Becomes Broader From Here
Caterpillar already has one of the strongest global brands in heavy equipment. Expanding compact manufacturing lets it use that dealer network and brand recognition across another part of the market without creating an entirely new business from scratch.
As the new capacity comes online, you can judge the strategy by whether Caterpillar turns its strength in heavy machinery into a larger presence across everyday construction and equipment spending.
(CAT currently trades at $807 and pays a dividend of $6.52 per share, a yield of 0.81%.)
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Consumer
Apple Is Making a Bigger Push Into the Connected Home
Apple Inc. (NASDAQ: AAPL) is reportedly preparing to launch a dedicated smart-home hub in October, alongside updates to the HomePod mini and Apple TV. The device would give Apple a more central role in controlling connected products around the home while tying more of those interactions into its existing software and services ecosystem.
The move would push Apple beyond devices people carry or wear and into a category designed to remain permanently inside the home.
The Home Gives Apple Another Place to Expand
Apple already connects phones, watches, computers, headphones, and entertainment products through one ecosystem. A home hub would add another layer by becoming a fixed control point for devices, communication, media, and potentially more AI-driven services.
Adding another Apple screen to your home matters because the company’s model becomes stronger whenever more everyday activity stays inside the same hardware and software ecosystem.
The Smart Home Becomes a Bigger Strategic Market
Apple has competed around the edges of the connected-home market through HomeKit, Apple TV, and HomePod, but a dedicated hub would represent a much more direct push.
For Apple, the implication goes beyond selling another device. You would be looking at another attempt to make the company’s ecosystem part of a daily routine that continues even when the iPhone is sitting somewhere else.
(AAPL currently trades at $329 and pays a dividend of $1.08 per share, a yield of 0.33%.)
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Energy Infrastructure
Honeywell Just Landed a Role in Another Massive Refinery Project
Honeywell Technologies (NASDAQ: HON) has been selected to provide technology, engineering services, equipment, and digital systems for Dangote's planned $16 billion refinery in Kenya. The project gives Honeywell a major role in one of East Africa's largest new industrial developments.
The companies already worked together on Dangote's refinery in Nigeria, giving Honeywell a chance to bring proven designs and operating experience into another large project rather than starting from scratch.
Honeywell Does Not Need to Own the Refinery
Honeywell makes money from the technology and systems that help large industrial facilities operate. That allows it to participate in major energy projects without taking on the cost and risk of owning the underlying plant.
A refinery this size may never appear among your everyday holdings, but Honeywell can still earn from the technology sitting behind the operation.
The Opportunity Extends Beyond Construction
Honeywell's role does not necessarily end once a refinery starts operating. Industrial customers keep buying catalysts, software, automation services, upgrades, and other technology throughout a facility's life.
That recurring relationship is where you get a clearer sense of the strategic value: one project win can create years of follow-on business without Honeywell having to own the refinery itself.
(HON currently trades at $210 and pays a dividend of $2.80 per share, a yield of 1.33%.)
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Dividend Stocks Worth Watching
Energy Transfer (NYSE: ET)
Energy Transfer is a pipeline MLP yielding roughly 7% on a trailing basis, and the distribution growth story is back on the table. Management has been guiding toward 3% to 5% annual distribution increases, and cash flow more than covers the payout. That's about as safe as this part of the midstream world gets.
Here's what to watch. Q3 earnings land in early November, and the Permian gathering and export business is the line to focus on.
Note that ET suspended its Lake Charles LNG project last December to put capital into pipelines, so the growth story now runs through its natural gas pipeline backlog. The units are down about 8% over the past month, which gives you a better entry.
If you want a 7% yield that's likely going higher, not lower, this is one of the cleanest ways to play it. You get paid to wait, and the catalysts are stacking up.
Eversource Energy (NYSE: ES)
Eversource is a regulated New England utility yielding around 4.6%, and the stock has faced real pressure over the past couple of years. Rate case overhangs. Offshore wind writedowns. Higher rates. All of it weighed on the stock. The stock is down about 9% in the past month and sits near its 52-week low, so a lot of bad news is already in the price.
Connecticut regulators are now reviewing a new rate request from Eversource's electric utility, with public hearings underway.
A constructive outcome would reset earnings power and remove the biggest overhang the stock has had, but Connecticut has been a tough regulator, so don't assume Eversource gets everything it asked for. Management also exited the offshore wind business, which cleans up the balance sheet story for you.
Buy it here if you want a defensive dividend that can re-rate when the regulatory picture clears. You're getting paid about 4.6% to wait.
Prudential Financial (NYSE: PRU)
Prudential is a major US life insurer yielding around 5% on a trailing basis, with a book that compounds every month as rates stay this high. Higher-for-longer is a tailwind for life insurers, period. The investment portfolio reprices into higher yields, and the spread business widens in your favor.
Q3 earnings land in late October and could be your catalyst. Watch the spread income and PGIM, its asset management arm. A beat on both lines would force analysts to update their models. The shares are down a few percent over the past month, so you're not paying up to get in.
If you want a 5% yield with real upside into earnings, this is your name. The dividend is covered multiple times by earnings, and the buyback adds a second layer of return. Build a position ahead of Q3 earnings in late October.
Dividend Increases
Republic Services (RSG) raised its quarterly dividend 7.2% to $0.67 per share from $0.625, a yield of about 1.3%.
Argan (AGX) boosted its quarterly dividend 40% to $0.70 per share from $0.50, a yield of about 0.8%.
Brady Corporation (BRC) raised its annual dividend to $1.00 per share from $0.98, a yield of about 1.2%.
GE HealthCare (GEHC) lifted its quarterly dividend 14% to $0.04 per share from $0.035, a yield of about 0.2%.
Dividend Decreases
Campbell's (CPB) cut its quarterly dividend 36% to $0.25 per share from $0.39, a yield of about 5.1% at the new rate.
Blue Owl Capital (OBDC) cut its quarterly base dividend to $0.31 per share from $0.37.
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Would you rather own a stock with 60 years of dividend increases but a slowing business, or one with just 5 years of increases but accelerating growth?
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Upcoming Dividend Payers
Roper Technologies (ROP) goes ex-dividend Friday, October 2, paying $0.91 per share on October 21.
Sysco (SYY) goes ex-dividend Friday, October 2, paying $0.55 per share on October 23.
Cisco Systems (CSCO) goes ex-dividend Friday, October 2, paying $0.42 per share on October 21.
Erie Indemnity (ERIE) goes ex-dividend Monday, October 5, paying $1.4625 per share on October 20.
Comcast (CMCSA) goes ex-dividend Wednesday, October 7, paying $0.33 per share on October 28.
Everything Else
💎 The next wave of market leaders is already forming and seven stocks are quietly doing what the Mag 7 did early on
📡 AT&T signed a fiber deal worth more than $3 billion with Corning as it pushes toward 60 million fiber locations by 2030.
🛢️ Exxon and Chevron won dismissal of a consumer lawsuit over plastic recycling claims, adding to a string of legal wins for Big Oil.
🏦 U.S. banks got a more predictable Fed stress-test framework, reducing swings in capital requirements that influence dividends and buybacks.
⚡ Utility stocks rebounded from a 17-month low even as Treasury yields remained near multi-decade highs.
That’s all for today’s edition of the Dividend Brief.
Thanks for reading, and if you have any feedback or dividend stocks you want me to take a look at, just reply to this email!
—Noah Zelvis
DividendBrief.com
