PACCAR To Generate Over 5% Dividend Yield In 2026, Analyst Sees New Peak EPS

BofA Securities analyst Michael Feniger upgraded PACCAR Inc. PCAR to Buy from Neutral, raising the price forecast to $121.50 from $116.

The analyst notes that PACCAR stock underperformed in 2024 due to pricing and production concerns, but projects green shoots in the truck market in 2025, leading to growth in 2026.

Per Feniger, PACCAR is one of the few OEMs likely to report a new peak EPS next year.

The analyst suggests that while all machinery markets face supply-demand imbalances, trucks will likely balance first due to factors like pre-emptive purchases ahead of emissions changes, stabilizing used truck inventories, and improving market indicators.

However, Feniger writes that risks include new admin pushing out EPA277, customers already replenishing fleets, weakening medium-duty orders, or higher rates impacting vocational demand.

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The analyst notes that third-party industry forecasts predict truck builds will decline by 3% in 2025 before rising by 11% to 353.5k units in 2026. Feniger projects the company to report a new peak EPS of $10.25 in 2026, which is $1 above consensus, as freight conditions improve and customers buy trucks ahead of EPA27.

Additionally, the company’s dividend is projected to yield over 5% in 2026, the highest in the sector, offering an attractive return amid rising 10-year yields.

Price Action: PCAR shares are trading higher by 2.14% to $110.48 at last check Tuesday.

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