Founded in 1925 with a product line consisting of just five tractors, Caterpillar (CAT) has grown to become the world’s largest industrial machine maker, with its hands in all major infrastructure industries. The company primarily sells construction and mining equipment, diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives.Caterpillar operates through four business segments:  Energy & Transportation (38% of profit): serves oil & gas, power generation, industrial, and transportation marketsConstruction Industries (38%): tied to infrastructure spendingResource Industries (16%): driven by mining and heavy constructionFinancial Products (8%): provides financing for Caterpillar equipment In addition to sales of heavy equipment, approximately 33% of Caterpillar’s revenue is tied to higher-margin aftermarket parts and services. Geographically, about 60% of the firm's revenue is generated outside of [...]

On February 5, Merck (MRK) announced plans to spin off its Women's Health and Biosimilar divisions, as well as various legacy branded drugs. Combined, these businesses ("NewCo") account for nearly 15% of Merck's revenue. Source: Merck Investor Presentation The spin-off transaction is expected to be completed in the first half of 2021 and will take the form of a tax-free distribution to Merck shareholders of a new publicly traded stock in the new company. Whenever a company spins off part of its business and shrinks its remaining earnings base, one of the first questions many income investors have is what will happen to the dividend. Merck has paid uninterrupted dividends for more than two decades, and that trend will continue. Management has [...]

Founded in 1912 during the dawn of flight, Lockheed Martin (LMT) is the world’s largest defense contractor and supplier of fighter aircraft. Though best known for its F-35 joint strike fighter, Lockheed has four major divisions that combined to generate $60 billion in revenue last year: Aeronautics (40% of sales): designs, manufactures, and services combat aircraft as well as military transport planes and unmanned air vehicles. Missiles and Fire Control (16% of sales): provides air and missile defense systems, air-to-ground weapon systems, and ground vehicles Rotary and Mission Systems (26% of sales): builds and services military and commercial helicopters in addition to sea-based combat systems Space Systems (18% of sales): designs and builds satellites, strategic and defensive missile systems, and space transportation systems The [...]

We are upgrading General Electric's (GE) Dividend Safety Score from Unsafe to Borderline Safe following continued improvement in the firm's cash flow generation and deleveraging progress. In early 2019, GE believed its core industrial operations might burn through as much as $2 billion as the company's turnaround took time to gain momentum. The company's money-losing Power division (about 20% of revenue), which builds turbines used by natural gas- and coal-fired power plants to generate electricity, was a primary culprit.