Both Broadcom AVGO and Caterpillar CAT are strong options for gaining exposure to the artificial intelligence (AI) buildout, with their consistent dividend payouts over time making them attractive to investors with an appetite for income.
Caterpillar Provides Power
Specifically, higher demand for Caterpillar’s power products used in data center applications, primarily large reciprocating engines, has been a strong piece of the momentum picture. The company deployed $7.9 billion in cash for share repurchases and dividend payouts throughout FY25 and holds the elite Dividend Aristocrat title.
Near-term EPS revisions keep the stock’s outlook strong, with analysts steadily raising their expectations over recent months. The stock sports a favorable Zacks Rank #2 (Buy).
Broadcom Pays Investors
Reflecting a key player in the AI infrastructure buildout, Broadcom provides custom AI chips and high-speed networking solutions needed to connect massive GPU clusters. Its growth outlook remains bright amid the favorable environment, with 48% YoY sales growth in its latest period reflecting a big acceleration relative to recent periods.
Broadcom’s strong cash generation has been a big reason investors have loved the stock throughout its history, enabling it to offer a strong blend of high-growth tech exposure and consistently growing dividend payouts. The company currently sports a 13.1% five-year annualized dividend growth rate, with EPS revisions also remaining well in positive territory over recent months.
Bottom Line
Both companies above – Caterpillar CAT and Broadcom AVGO – have emerged as strong options for AI exposure for those with an appetite for income. It’s reasonable to expect their outlooks to remain strong given their favorable positions, with the AI trade certainly not over.
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This article originally published on Zacks Investment Research (zacks.com).
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