3 Dividend Growth Stocks Ready To Profit From Higher Infrastructure Spending

The U.S. stock market is reaching new highs, and a select group is responsible for a bulk of the gains. The rally in the Dow Jones Industrial Average is being led in large part by industrials.

Industrials are some of the most economically-sensitive stocks in the market. They are highly dependent on economic growth.

With the outcome of the U.S. election, the market rally could be responding to anticipation of higher infrastructure spending. Any potential boost to domestic infrastructure like roads and bridges would be a significant stimulus to the nation’s largest industrial manufacturers.

This article will discuss three stocks in particular that stand to benefit from greater infrastructure spending.

All 3 are high quality dividend growth stocks with long dividend histories. Two are, in fact, Dividend Achievers – stocks with 10+ consecutive years of dividend increases.You can see the full list of all 273 Dividend Achievers here.

Keep reading this article to see 3 dividend growth stocks poised to profit from higher infrastructure spending analyzed in detail.

Caterpillar (CAT)

Caterpillar stock is up 16% in just the past one month. Caterpillar could use a boost, because this year has been a rough one for the company.

Sales in the third quarter declined 16% from the same period last year. In addition, operating expenses are rising due to a significant company restructuring and weak pricing.

cat-operating-profit

Source: Credit Suisse Industrials Conference presentation, page 11

Collectively, this caused operating profit to decline 48% last quarter, year over year. The results would have been even worse if not for a huge cost-cutting effort.

Caterpillar cut manufacturing costs by $234 million in the third quarter. It also cut period costs by $420 million.

This will not help revenue, which is expected to drop significantly in 2016. The company expects full-year revenue to decline 29%, to $39 billion.

These cost cuts are helping Caterpillar at least stay profitable. Management forecasts $3.25 in earnings-per-share this year, not including restructuring costs.