The U.S.-China Trade Deal is Good News for This Dividend Aristocrat

The United States and China came to the table on January 15 to sign a limited trade deal. Some critics have said that the deal is limited and amounts to a temporary armistice.

China agreed to take in more U.S .exports, but major sticking issues like intellectual property, technology development, and national security are still casting a large cloud over U.S.-China relations.

Caterpillar (NYSE:CAT) has moved up on down on trade news between the two economic giants. The company is a big player in China.

A trade war is especially damaging as the nation undergoes one of the most ambitious infrastructure spending plans in history with its Belt and Road Initiative. Caterpillar is positioned to make significant sales on the back of this mammoth project.

In the third quarter, Caterpillar reported revenues of $12.8 billion which were down 6% from the prior year. It lowered its fiscal 2019 guidance to earnings per share between $10.9 and $11.4, which represented a $1.4 EPS reduction at the midpoint.

Caterpillar’s Construction Industries segment reported a 7% drop to $5.3 billion, largely due to lower activity in China.

Shares of Caterpillar have climbed 11% over the past three months as of close on January 21. Caterpillar has increased its dividend for over 25 consecutive years, which makes it a dividend aristocrat.

It currently pays out a quarterly dividend of $1.03 per share, representing a 2.8% yield. The stock is not cheap at current levels but this trade breakthrough is encouraging to start this decade.