Enhanced Dividend Income Portfolio Adds Caterpillar Shares as AI Concerns Weigh

The Enhanced Dividend Income Portfolio bought Caterpillar shares at $581 last week, adding to a position held for more than 10 years as election-related concerns about data-center development weighed on the stock.

Caterpillar shares had already been under pressure before the election and fell another 11% over the following two days. The portfolio’s purchase price was about 46% below Caterpillar’s record high on June 30.

Caterpillar makes equipment used in data-center construction and sells engines, generators and turbines that can provide power to the facilities. That gives the company exposure to both construction activity and power demand tied to data centers.

The company’s third-quarter revenue rose 17% to $20.7 billion. Adjusted earnings per share increased about 45% to $7.20, power-generation sales grew 30%, and its Machinery, Power and Energy businesses generated $3.8 billion in free cash flow.

The portfolio’s investment case also includes Caterpillar’s construction, mining and energy businesses, which grew in the quarter. Those operations are cyclical, and delays in data-center projects can affect demand and delivery timing. Kevin Simpson’s firm owns Caterpillar shares.

Caterpillar raised its dividend 8% this year, marking its 32nd consecutive annual increase.