Dividend Growth Stocks: 25 Aristocrats

14. Caterpillar Inc. (NYSE:CAT)

5-Year Average Dividend Growth Rate: 7.59%

On January 30, Baird raised its price target on Caterpillar Inc. (NYSE:CAT) to $805 from $680 and maintained an Outperform rating. The firm updated its model after reviewing fourth-quarter results that pointed to a large backlog, solid earnings visibility, and returns on invested capital that continue to run ahead of expectations.

A Reuters report said Caterpillar’s fourth-quarter performance reflected the broader global economy. Sales benefited from a surge in spending tied to artificial intelligence, even as the company warned investors about a potential tariff impact of more than $2 billion in the year ahead. Like several large technology names, Caterpillar and other industrial companies have leaned into the AI narrative to support investor interest. Over the past year, the stock has climbed about 60%, roughly four times the gain of the S&P 500 over the same period.

The AI boom has reshaped Caterpillar’s business mix. Power and energy is now the company’s largest segment by sales, overtaking its long-standing construction unit. Demand has been especially strong for “prime power” systems. These large generators are built to deliver continuous, round-the-clock electricity.

On the post-earnings call, CEO Joe Creed said data center customers are increasingly turning to on-site power solutions as they work to keep up with rapid growth.

Caterpillar Inc. (NYSE:CAT) manufactures construction and mining equipment, off-highway diesel and natural gas engines, industrial gas turbines, and diesel-electric locomotives.