Caterpillar (NYSE:CAT) and Target (NYSE:TGT) both announced today that they will raise dividends to shareholders of their common stock holdings. Target upped its dividend by 20%, or 5 cents per share, while Caterpillar raised its own by a slimmer margin of 4.5%, or 2 cents per share.
As economic confidence has showed signs of losing momentum, dividend hikes from these companies come as much needed good news. The rise in yields may represent a rebound for the firms, which boast very large market capitalizations of $63.21 billion (Caterpillar) and $32.39 billion (Target). According to FoxBusiness, “At the lowest point of the recent financial crisis in 2008 and 2009, many companies lowered their dividends or eliminated them altogether in an effort to hang on to cash and maintain their capital levels. This was especially true in the hard hit financial sector. Companies raising their dividends can be viewed as a sign that these companies are optimistic about their futures.”
Target’s next round of dividends will include the rate hikes, and will be payable to shareholders on September 10th. Caterpillar will likewise payout its increased yields on August 20th.
Today’s news comes following last weeks’ announcement by FedEx (NYSE:FDX), that it also plans to up its dividends for the current quarter.
In spite of the good news for shareholders, investors remained bearish on the stocks today as Caterpillar (-2%) Target (-.4%) and FedEx (-1.35%) all shed value in trading.