Covered, cyclical compounding. A 0.95% yield on a 34.2% adjusted payout is covered income from a cyclical earner: $1.63 a quarter, raised in June 2026 by 8%, the 32nd consecutive year of higher annual dividends. FY2025 enterprise operating cash flow was $11.7 billion against $2.7 billion of dividends paid, so cash covers the rate several times over even as adjusted profit per share fell to $19.06 from $21.90.
Key risk: Cyclicality and tariffs — adjusted operating margin fell to 17.2% in FY2025 from 20.7%, and the company flagged an expected $2.6 billion tariff hit in 2026. A construction or mining downturn would cut the earnings base faster than the dividend rate.
Changes if: Adjusted profit per share falls toward the dividend rate, or enterprise operating cash flow drops toward the dividend total. At 34.2% of adjusted earnings and with $11.7 billion of FY2025 operating cash flow, the cushion is wide today.
- ✓Payout-coverage check: 34.2% on an adjusted basis — $6.52 indicated against $19.06 of FY2025 adjusted profit per share; FY2025 enterprise operating cash flow of $11.7 billion covered $2.7 billion of dividends paid.
- !Yield check: 0.95% indicated — $1.63/qtr × 4 at the $687.00 close on Oct. 23, 2026. Real and covered, but low: the income here is small next to the price, and the compounding case rests on dividend growth, not current yield.
- ✓Dividend growth check: 32 consecutive years of higher annual dividends; the latest raise, on June 10, 2026, lifted the quarterly dividend 8%, from $1.51 to $1.63.
What this grade doesn't say: It screens the dividend only — covered, real, compounding. It says nothing about valuation or price: a well-covered payer can still be overpriced, and its price can still fall.