14 Best Dividend Aristocrats to Invest in Heading into 2026

3. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 70

Upside Potential as of December 22: 8.9%

Caterpillar Inc. (NYSE:CAT) is one of the best dividend aristocrat stocks to buy now.

On December 19, Bernstein raised its price target on Caterpillar Inc. (NYSE:CAT) to $630 from $557 and kept a Market Perform rating. Looking at the broader sector, the firm said 2025 has been difficult from a fundamentals standpoint. Street estimates dropped 5%–10%, and core end markets moved through a familiar cyclical downturn. Bernstein expects 2026 to look different. The firm sees a recovery driven by tighter alignment between monetary and fiscal policy. That setup could restart positive estimate revisions, with low- to mid-single-digit upside.

A separate report from Bloomberg noted that Caterpillar Inc. (NYSE:CAT)’s AI-driven rally recently lost momentum. Investors began questioning how durable the AI trade is across US equities. The stock fell 9.6% over the five sessions ending December 18. That marked the weakest showing in the S&P 500 Machinery Index. Since then, the shares have rebounded and gained nearly 1% through the close of December 22.

Bloomberg also pointed out why Caterpillar emerged as an unexpected AI-linked name. A smaller unit sells gas turbines used to power data centers. That narrative, along with lower interest rates that tend to support construction activity, helped drive a roughly 60% rise in the stock this year. Valuation has moved sharply higher, and shares have traded at as much as 28 times forward earnings, the highest level since 2017.

Caterpillar Inc. (NYSE:CAT)is the world’s leading maker of construction and mining equipment. The company also produces off-highway diesel and natural gas engines, industrial gas turbines, and provides related power systems, financial products, and support services worldwide.