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The One Dividend Aristocrat Held By Cathie Wood's ARK ETFs

She's known for her high growth disruptive innovation picks, but she does own one long-term dividend grower.

Caterpillar, Inc (CAT) is a Fortune 100 company based in the United States that designs, develops, engineers, manufactures, distributes, and sells machinery, engines, financial products, and insurance to clients through a global dealer network. It is the world's largest manufacturer of construction equipment.

Since 1992, Caterpillar stock has been a part of the Dow Jones Industrial Average (DJIA), a price-weighted average of 30 major stocks on the New York Stock Exchange.

Caterpillar is the ARK Autonomous Technology & Robotics (ARKQ) ETF's 15th largest holding. Caterpillar's stock is currently trading near its all-time high, following a spectacular market-beating year in 2020. It has gained more than 25% in 2021, making it one of the best-performing stocks in the DJIA.

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Caterpillar is a global corporation that produces more than half of its revenue outside of the United States. International competition is strong in the mining, construction, and energy industries, particularly in China, Caterpillar's most lucrative market.

Caterpillar uses machine learning and big data to help its clients manage their fleets to remain ahead of the competition. Caterpillar has created technologies like Cat Connect and Cat Digital that can be used on old and new machines.

Caterpillar and Autonomous Driving

Caterpillar has been manufacturing autonomous vehicles since the 1990s, but few investors are aware of this. The company also makes semi-autonomous vehicles, including human-driven earthmovers equipped with advanced technologies such as ultrasonic lasers and GPS to guide grading to limits, depth, and slope specifications.

Caterpillar is already there, notably with their mining customers, while automakers and IT businesses prepare for a future with self-driving cars.

Today, you can see automation in action at a forward-thinking mine. Operator-assist technologies increase productivity and reduce expenses by controlling certain machine activities. Operators are moved out of cabs and away from risks using remote control devices. And, in certain circumstances, completely self-driving trucks. Haulers that are massive are transporting payloads of up to 250 tons with no operators in sight!

These machines can work around the clock, constantly taking the most effective route and helping to automate a crucial aspect of the mining process, ensuring that its customers get the most out of every second spent on any task.

Machine automation has been the most significant technological advancement in the recent decade, and Caterpillar has been a pioneer in this field for many years. With the Cat MineStar Command, miners can now do the following:

  • automate a single mining process
  • remotely control a single machine
  • automate numerous types of equipment across a mixed fleet
  • adopt a wholly autonomous fleet of haul trucks that run around the clock with no human interaction

Customers who used Cat Command trucks had successfully moved approximately 3 billion tonnes and traveled over 100 million kilometers autonomously by the end of 2020, which was much greater than their competitors.

Individual technology options can be used alone or in combination to generate immediate productivity, efficiency, and safety benefits and serve as the foundation for autonomous mining operations.

The company's newest technological efforts include 3D printing capabilities, which may eventually enable parts fabrication on job sites to save downtime. CAT has a specialized plant where engineers are testing this technology.

ARK Autonomous Technology and Robotics ETF (ARKQ)

ARKQ is an actively managed exchange-traded fund (ETF) that targets long-term capital creation by investing at least 80% of its domestic and foreign equity securities of autonomous technology and robotics companies related to the Fund's disruptive innovation investment theme.

Companies in the ARK Autonomous Technology & Robotics ETF (ARKQ) are focused on the development of new products or services, technological advancements, and advances in scientific research related to, for example, automation, energy, and manufacturing, transportation, and materials, and are expected to benefit significantly.

These companies can develop, produce, or facilitate the following:

  • Autonomous Transportation
  • Robotics and Automation
  • 3D Printing
  • Energy Storage
  • Space Exploration

After the massive stock market gains of 2020, Cathie Wood's ARK Invest ETFs are popular funds. The company had $50 billion in assets under management as of February 2021.

Who is Cathie Wood?

Cathie Wood is regarded as one of the top stock pickers in the world. In 2020, she outperformed all other stock pickers! She founded ARK Investment Management LLC, a worldwide asset management specialized in disruptive innovation thematic investment.

Cathie launched ARK to focus only on disruptive technologies while bringing new dimensions to research. She has more than 40 years of expertise identifying and investing in innovation.

Instead of sector by sector, she examines the market through five important innovation platforms, namely:

  • artificial intelligence
  • energy storage
  • robotics
  • DNA sequencing
  • Blockchain

According to Bloomberg data, ARK has outperformed the S&P 500 by over 2.4 times and the Nasdaq by 1.7 times since its inception.

Caterpillar (CAT) Stock and Dividend News

Caterpillar (CAT) stock is trading at $221.19 as of August 11, 2021.

Caterpillar announced in June 2021 an increase in their dividends, payable in August 2021. The quarterly cash dividend will be increased by eight cents, or 8%, to $1.11 per share of common stock. Their robust balance sheet and liquidity position allow them to keep increasing their dividend and distributing value to shareholders, as they have done in the past.

The company pays out a 2.17% dividend yield. In comparison, the Manufacturing - Construction, and Mining industry's yield is 0.86 % and 1.37% for the S&P 500.

Caterpillar has a dividend growth rate of 6% over five years and 8.88% over ten years.

Since its inception, Caterpillar has paid a cash dividend every year and a quarterly dividend since 1933. For the past 27 years, they have paid higher dividends to shareholders and are members of the S&P 500 Dividend Aristocrat Index.

A Dividend Aristocrat is a stock in the S&P 500 index that pays a dividend every year and increases the size of the distribution every year. If a company has continuously raised its dividends for at least the past 25 years, it is dubbed a Dividend Aristocrat.

Second-Quarter Financial Results – 2021

Caterpillar, Inc released its second-quarter financial results in July 2021. Here are some of the highlights:

  • Sales and revenues in the second quarter of 2021 increased by 29% to $12.9 billion.
  • The second quarter of 2021's profit was $142 million, up by $83 million or 141% from the second quarter of 2020.
  • $2.56 profit per share in the second quarter of 2021; adjusted profit per share of $2.60
  • Dividends and share repurchases paid $0.8 billion to owners.
  • In the second quarter of 2021, the operating profit margin was 13.9%, up from 7.8% in the second quarter of 2020.
  • Enterprise operating cash flow was $4.0 billion in the first half of 2021. After increasing the dividend and resuming share repurchases, the company returned $0.8 billion to shareholders in the quarter. They had $10.8 billion in enterprise cash at the end of the quarter.

Conclusion

Investors interested in participating in the driverless car revolution can now purchase exchange-traded funds (ETFs) dedicated to autonomous vehicles, electric vehicles, and other automotive technologies.

ARKQ invests in companies that are identified as having the potential to benefit from technological advancements, such as in the field of electric and driverless vehicles. This would qualify Caterpillar's inclusion in the Fund.

When it comes to developing onboard technology for their equipment, Caterpillar engineers look to the future. As new upgrades and retrofits become available, they continue to provide them to improve an existing truck or fleet. Caterpillar continues to invest in cutting-edge technologies that deliver high-quality data and analytics in real-time, significantly impacting every part of a customer's business.

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