20 Best Performing Dividend Stocks in 2025

16. Caterpillar Inc. (NYSE:CAT)

YTD Return as of December 30: 60.8%

Dividend Yield as of December 30: 1.05%

Caterpillar Inc. (NYSE:CAT) is among the best-performing stocks to buy.

Power-hungry AI projects have turned into a clear tailwind for Caterpillar Inc. (NYSE:CAT). The company sells engines and generators to a wide range of customers, and that side of the business is getting more attention. For decades, Caterpillar built much of its roughly $65 billion operation around massive yellow dump trucks, bulldozers, and other heavy equipment used in mining and construction. That mix is starting to change. The power and energy unit is now Caterpillar’s fastest-growing segment. Demand is rising as data center operators invest heavily to support AI workloads.

Management expects this business to help lift annual sales growth to a 5%–7% range through 2030. That compares with about 4% growth in recent years. Investors have responded positively, pushing the stock into the ranks of the top performers on the Dow this year. To meet demand, Caterpillar Inc. (NYSE:CAT) is stepping up spending in a way it hasn’t done in about 15 years. The company is investing $725 million at its Lafayette, Indiana, plant to increase production of piston-driven engines used in generators. It is also working toward more than doubling turbine engine capacity by 2030. This marks a noticeable shift. In recent years, CAT closed facilities and leaned hard into cost controls to lift margins. Now the focus is on expanding capacity where demand is strongest.

Caterpillar Inc. (NYSE:CAT) and other generator makers have also benefited from the broader enthusiasm around AI-related stocks. Caterpillar shares are up nearly 61% so far this year, more than three times the gain of the S&P 500.