5 Best Income Stocks to Buy Right Now

4. Caterpillar Inc. (NYSE:CAT)

Dividend Yield as of October 20: 2.60%

Caterpillar Inc. (NYSE:CAT) is one of America’s leading manufacturers of industrial and construction equipment. The company is one of the best dividend stocks on our list as it has been raising its dividends consistently for the past 28 years. Currently, it offers a quarterly dividend of $1.20 per share for a dividend yield of 2.60%, as of October 20.

Caterpillar Inc. (NYSE:CAT) remained obligated to its shareholder returns in the second quarter of 2022. The company returned $1.7 billion to shareholders in dividends and share repurchases during the quarter. In the first half of the year, it generated over $2.5 billion in free cash flow, returning $600 million in dividends.

In October, JPMorgan raised its price target on Caterpillar Inc. (NYSE:CAT) to $220 with an Overweight rating on the shares, appreciating the company’s high-end user demand. The firm also expects resilient demand and improved deliveries for the company.

At the end of the June quarter, 45 hedge funds tracked by Insider Monkey owned stakes in Caterpillar Inc. (NYSE:CAT), compared with 54 in the previous quarter. These stakes are collectively valued at over $3.25 billion. Fisher Asset Management was the company’s leading stakeholder in Q2, owning shares worth over $1.3 billion.

Diamond Hill Capital mentioned Caterpillar Inc. (NYSE:CAT) in its Q1 2022 investor letter. Here is what the firm had to say:

“We also initiated a position in Caterpillar (NYSE:CAT), one of the world’s leading manufacturers of construction and mining equipment. It’s a company we know well, as we have owned it in our large cap portfolio for quite some time. Recent share price weakness provided an opportunity for us to add it to our large cap concentrated portfolio at an attractive discount to our estimate of intrinsic value. We believe Caterpillar stands to benefit from increased capital investment supported by a healthier/recovering end market environment, particularly in construction and mining.”