10 Best GARP Stocks That Pay Dividends

8. Caterpillar Inc. (NYSE:CAT)

Number of Hedge Fund Holders: 50

An American manufacturing company, Caterpillar Inc. (NYSE:CAT) specializes in construction, mining, and other engineering equipment. Analysts have an optimistic outlook for the company, given that the global market for backup power solutions in AI data centers could reach nearly $23 billion by 2028. In a research note from December, Jefferies highlighted several key factors supporting Caterpillar’s growth prospects. The firm pointed to a potential increase in demand for construction equipment, particularly for rebuilding efforts in war-affected regions like Ukraine. In addition, expectations of eased oil production regulations in the US could drive higher demand for construction machinery within the domestic oil and gas sector. At the same time, Jefferies anticipates a rise in demand for mining equipment due to the growing need for minerals essential to renewable energy production.

In the past 12 months, Caterpillar Inc. (NYSE:CAT) has delivered over 11.5% return to shareholders. In the fourth quarter of 2024, the company posted revenue of $16.2 billion, reflecting a 5% decline from the same period a year earlier. The decrease was largely driven by an $859 million drop in sales volume, mainly due to shifts in dealer inventories and lower equipment sales to end users. Dealer inventory levels decreased by $1.3 billion during the quarter, a steeper decline compared to the $900 million reduction in the fourth quarter of 2023. Meanwhile, the company’s profit per share rose to $5.78, up from $5.28 in the same period last year.

Caterpillar Inc. (NYSE:CAT) maintained a solid financial position in 2024. The company generated $12.0 billion in operating cash flow throughout the year and ended the fourth quarter with $6.9 billion in cash. Over the year, it allocated $7.7 billion toward share repurchases and distributed $2.6 billion in dividends to shareholders. The company’s quarterly dividend comes in at $1.41 per share for a dividend yield of 1.6%, as of February 14. It is one of the best GARP dividend stocks on our list as the company has raised its payouts for 30 years straight.