CAT's stock has been cut in half, and now the company's paying out just the right amount... to make it so you can buy this one and wait out the recession.

Now, in past recessions, CAT would have, unbelievably, lost money. But I look at the bear case this time around, that CAT's earnings will get cut in half, to $2.50 a share, and the bear case convinces me that this is an incredible buy!...

That's right!... The bear case convinces me it's a buy, because it will still be able to more than pay out that dividend.

We all know the fundamentals here are totally devoid of pulcritude, but that doesn't mean the stock won't work. The ISM numbers, whatever they are, are getting worse... the dollar's getting stronger... although it's still weaker than it was a year ago, making CAT's equipment relatively more expensive versus its foreign competitors.

Energy looks really bad... Housing is just unbelievably awful... although management pointed out that it saw some signs of stabilizing. Of course, they're the only ones that saw signs of stabilization.

Then again, there are reasons to believe that CAT's management may actually know what it's talking about...

Unsold new-home inventories have been dropping. You know I think that we will see a recovery next year in housing... Higher steel prices, which had been hurting CAT should become less of a problem as steel gets cheaper. CAT's putting through price increases and it thinks those, in combination with its new products, will keep its earnings healthy next year.

Here's what you have to understand...

The analysts are behind the curve... They're saying things are going to be terrible next year, but CAT's stock already reflects that. It's been to $33 and back. And, at that price, it was reflecting not just a recession, but a full depression!... And that's not going to happen.

If CAT's stock goes back to $33, where it will yield 5.2%, I would literally back up the truck and buy even more of it!...

CAT's yield is so high because the stock has already come down. The analysts are just telling us what the share price already shows. Don't forget, we are betting on a massive infrastructure giveaway under a President Obama, or even McCain... He looks like he'll be the winner tonight, but what do we know?...

And when you build roads, you know what you need... this is what you do, you buy a million of these and, believe me, Obama's not going to be buying Kubotas (another equipment brand) for this work! Caterpillar, which remember, is based in Illinois (Obama's home state) is a fabulous Obama play... This one "pays" in Peoria...

As long as CAT is yielding more than 4% or around there, I think it's a buy. The worst thing that happens is it goes lower, and you get to buy more with a higher yield, something I'm cheering for.

If it goes up, we're going to scale out just like the other stocks that go up so much... Once it gets to a 3% yield, we're going to sell some.

If CAT's management turns out to be wrong, and the analysts turn out to be right, the stock is already priced like that's the case and it's paying out that fat dividend...

Hey, what if CAT's management is right and the analysts are wrong?...

I'm usually willing to pay 12x earnings for a cyclical stock... So, if CAT does the $5 bucks that they think it can, I'm talking about $60 (a share stock price)... Hey, 43% higher than the current price!

If its earnings get cut in half, it trades to $30.

$20 up, or $10 down, with a 4% yield?... It would be reckless not to pull the trigger...

Here's the bottom line...

The Bottom Line!:     Caterpillar Inc. (CAT)'s another artificially-high yielder, a total tractor error in your favor, where the bearish analysts are still trying to catch up to the share price, which has already been cut in half... CAT's dividend is safe. So long as it's yielding over 4%, or anywhere within the vicinity, I would be a size buyer.

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