Cummins is Strengthening its Dividend Appeal

Cummins Inc. (NYSE:CMI) is among the best next generation dividend aristocrat stocks.

Many income-focused investors tend to overlook Cummins as a dividend stock, often recognizing it solely for its role as a leading manufacturer of diesel and natural gas engines. However, the company is a reliable dividend payer with strong potential for future growth in distributions.

A mechanic standing proudly in a factory floor surrounded by the engines the company produces.

Cummins Inc. (NYSE:CMI) has laid out a firm commitment to shareholder returns. In its FY24 earnings report, the company reiterated its goal of returning 50% of its operating cash flow to shareholders over the long term. In 2024 alone, it distributed $969 million in dividends, backed by over $1.4 billion in operating cash flow, highlighting the strength of its financial foundation.

Beyond the numbers, Cummins Inc. (NYSE:CMI) has raised its dividend for 15 straight years, positioning it as a serious contender for future Dividend Aristocrat status.

Despite facing a legal challenge in 2023, the company made notable progress in 2024. It exited its filtration business, partnered with Isuzu to launch a new engine for Japan’s medium-duty trucks, and introduced new products aimed at the high-growth data center market, signaling a year of strategic transformation and forward momentum.

Cummins Inc. (NYSE:CMI) offers a quarterly dividend of $1.82 per share and has a dividend yield of 2.28%, as of June 14.

Cummins Inc. (NYSE:CMI), a global leader in power solutions, operates through five key business segments: Engine, Components, Distribution, Power Systems, and its clean energy division, Accelera by Cummins.

While we acknowledge the potential of CMI as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure. None.