Is Deere & Company a Sure Bet for Dividend Investors?
July 20, 2022 at 01:00 AM EDT
Nothing's a sure bet, but Deere & Company (NYSE: DE) has looked promising despite myriad economic and other challenges. The company predicted that it would produce a net income of between $6.5 billion and $7 billion in the fiscal year 2022. But is that enough of a reason to invest in the name that charted the course of modern-day farming equipment?
Let's take a look at the history of Deere & Company and the pros and cons of adding the stock to your pile of dividend investments. Doing your own research can help you decide whether to invest in Deere & Co. and determine whether it will offer you the best dividend stock returns to meet your goals.
History of Deere & Company
John Deere, who moved from Vermont to the Midwest, set up shop as a blacksmith in Grand Detour, Illinois, in the 1830s. He noticed that settlers were having trouble taming the prairie soil. He whipped a broken Scottish steel saw blade to a piece of wood to create a plow and just like that, created a business that still bears his name. By 1849, he had produced 2,000 plows from these steel saw blades, which could till Midwestern prairie soil without gumming up.
In 1912, the company began expanding into tractors. In 1947, John Deere released its first self-propelled combine, model 55. The 1960s and 1970s ushered in technological changes that required farmers to farm more land for profitability. Deere set its sights on farm equipment for large-scale farming — large tractors, balers as well as seeding and harvesting machinery.
The company has since expanded beyond farm equipment, creating industrial, construction and forestry equipment all over the United States, Canada, Europe, India, Argentina, Brazil and South Africa. It operates through four segments:
The Moline, Illinois-based company has begun expanding into machine learning, applying it to agriculture as well. For example, Deere & Company acquired Blue River Technology in September 2017, which reduces herbicides by spraying only where weeds exist.
For the second quarter ended May 1, 2022, Deere & Company reported a net income of $2.098 billion compared with a net income of $1.790 billion on May 2, 2021. Net sales and revenues increased 11% to $13.370 billion in the second quarter of 2022 and for six months, rose 8% to $22.939 billion. Net sales were $12.034 billion for the quarter and $20.565 billion for six months, compared with $10.998 billion and $19.049 billion last year.
While historical results never guarantee future results, it's also important to consider the track record of the company in which you plan to invest. It can clue you into a lot about a particular company and help you decide whether you should invest or not.
Pros and Cons of Deere & Company
Why might you want to invest in Deere & Company and why might you want to consider just keeping an eye out instead? Let's take a look at both the pros and cons of investing in Deere & Company stock.
Is Deere & Company a Decent Dividend Pick?
It's important to recognize that Deere & Company is not the only decent dividend pick. (Check out the 6 best dividend stocks of all time.) Among a world of competitors and telltale whipsaw of its stock price this year, Deere & Company has its struggles as well as its high points, just like a lot of its competitors.
It's a good idea to evaluate your goals against the qualities (the highs and the lows) of the company you plan to invest in.
Learn more: Best Growth and Dividend Stocks