Cummins Increases Dividend to $2.00, Boosting Yield to 2.2%

Cummins Inc. (NYSE:CMI) has announced a dividend payment of $2.00, an increase from last year's comparable dividend. The dividend yield is 2.2%, and EPS is forecast to expand by 27.9% over the next year. The company has a solid track record of stable dividend payments, with a compound annual growth rate of approximately 9.9% over the past five years. However, the dividend may not be sustainable due to a high cash payout ratio.

Cummins Inc. (NYSE:CMI) has recently announced a significant increase in its quarterly dividend payment. The new dividend stands at $2.00 per share, marking a substantial rise from last year's comparable dividend of $1.82 per share [1]. This increase reflects a positive change in the company's payout strategy, with the dividend now yielding 2.2% [1].

The company's earnings per share (EPS) for the latest quarter was $5.96, surpassing analysts' expectations by $1.04. Revenue for the quarter was $8.17 billion, although it declined by 2.7% year-over-year. Despite the revenue decline, Cummins has maintained its strong financial position, with a return on equity of 26.88% and a net margin of 8.20% [1].

Cummins has a history of stable dividend payments, with a compound annual growth rate (CAGR) of approximately 9.9% over the past five years. However, the recent dividend increase may not be sustainable due to the high cash payout ratio of 36.22% [1]. This ratio indicates that a significant portion of the company's earnings is being distributed as dividends, which could potentially impact future growth and investment in the business.

Several institutional investors have also shown interest in Cummins' stock. Liberty Wealth Management LLC, for instance, acquired a new stake in Cummins, purchasing 15,369 shares valued at approximately $4.82 million in the first quarter [2]. Additionally, a number of other institutional investors have made changes to their positions in Cummins, with some increasing their stakes and others reducing their holdings [1, 2].

Analysts have varying opinions on Cummins' stock. Morgan Stanley, for example, increased its target price on shares of Cummins from $340.00 to $350.00 and gave the stock an "overweight" rating [1]. Citigroup also reissued a "buy" rating and increased its target price to $360.00 [1]. However, Truist Financial reduced its target price on Cummins from $420.00 to $338.00 and set a "hold" rating for the company [1]. Overall, the consensus rating among analysts is "Hold" with a consensus target price of $361.92 [1].

In conclusion, Cummins Inc.'s increased dividend payment is a positive development for shareholders. However, the high cash payout ratio and varying analyst opinions suggest that investors should carefully consider the company's long-term prospects before making investment decisions.

References:
[1] https://www.marketbeat.com/instant-alerts/filing-ifg-advisory-llc-sells-905-shares-of-cummins-inc-nysecmi-2025-08-03/
[2] https://www.marketbeat.com/instant-alerts/filing-liberty-wealth-management-llc-acquires-new-holdings-in-cummins-inc-nysecmi-2025-08-03/