Redditors Recommend These 5 Dividend Stocks for College Students

3. Caterpillar Inc. (NYSE:CAT)

Dividend Yield as of August 16: 2.43%

Caterpillar Inc. (NYSE:CAT) is an Illinois-based construction company that deals in the production of industrial machinery. The company has great growth potential because a lot of its equipment is needed for mining purposes and the production of EVs, which is reporting strong global sales. In August, Credit Suisse appreciated the company’s strong pricing power and sees strong demand across its all segments. Given this, the firm raised its price target on the stock to $236 with an Outperform rating on the shares.

In the first half of 2022, Caterpillar Inc. (NYSE:CAT) generated $2.5 billion in free cash flow and spent over $600 million in dividends during this time. The company’s strong financials confirm that its dividends are well-covered for the future as well. On June 8, Caterpillar Inc. (NYSE:CAT) announced an 8% hike in its quarterly dividend to $1.20 per share. This was the company’s 28th year of dividend growth with an 89-year history of uninterrupted dividend payments. As of August 16, the stock’s dividend yield stood at 2.43%.

As of the close of Q1 2022, Bill & Melinda Gates Foundation Trust owned $1.6 billion worth of stakes in Caterpillar Inc. (NYSE:CAT), becoming the company’s largest stakeholder. In addition to this, 54 hedge funds in Insider Monkey’s database were bullish on the company in Q1, owning stakes worth over $4 billion.

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