5 Undervalued Dividend Aristocrats To Buy Now

2. Caterpillar Inc. (NYSE:CAT)

P/E Ratio as of January 12: 18.3

Caterpillar Inc. (NYSE:CAT) is a Texas-based construction equipment company that also manufactures mining products. The company has been raising its dividends consistently for the past 28 years and currently offers a quarterly dividend of $1.20 per share. The stock’s dividend yield on January 12 came in at 1.88%.

In the third quarter of 2022, Caterpillar Inc. (NYSE:CAT) returned over $2 billion to shareholders in dividends and share repurchases. As of January 12, the stock is trading at a PE multiple of 18x and is among the undervalued dividend aristocrats on our list.

Stifel raised its price target on Caterpillar Inc. (NYSE:CAT) to $271 in December with a Buy rating on the shares, expecting the price/cost environment to improve in the upcoming quarters.

At the end of Q3 2022, 43 hedge funds tracked by Insider Monkey owned stakes in Caterpillar Inc. (NYSE:CAT), compared with 45 in the previous quarter. These stakes are valued at over $2.8 billion collectively.

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.”