Forget the Industry Labels: Chevron and Caterpillar Are Both Betting on the AI Power Boom. Which 30+ Year Dividend Grower Wins?

Caterpillar (NYSE: CAT) is an iconic industrial company. Chevron (NYSE: CVX) is an iconic oil and natural gas business. And both are competing to provide reliable electricity to artificial intelligence (AI) data centers. The AI revolution is so big that you need to throw out industry labels. But which of these reliable dividend stocks has the better business plan? It depends on how you look at it.

Caterpillar is a near-term winner

When it comes to providing reliable power to AI data centers, Cat likely has the lead right now. A big part of the problem for AI is that electricity demand is huge, and the power grid can't respond quickly enough to meet the demand it is seeing. This is where Cat comes in: in addition to large earth-moving equipment, it also makes generators that provide electricity in remote locations.

Image source: Getty Images.

Historically, Cat's generators have been used as backup power or as primary power in places like remote mining operations. But they can also be placed next to an AI data center if a grid connection isn't available, allowing the facility to come online more quickly. The company is hitting on all cylinders today, with its backlog at the end of the second quarter of 2026 sitting at a record $72 billion. That was up 92% year over year.

To be fair, building AI infrastructure requires the earth-moving equipment Cat makes, too, so there's more than just power at play here. Still, Cat is probably better positioned right now than Chevron when it comes to providing AI with the electricity it needs to "live."

Chevron is working the long game

But don't count Chevron out. It has inked a deal with Microsoft (NASDAQ: MSFT) to build a natural gas power plant dedicated to serving a data center. The power plant still has to be constructed, but it comes along with a 20-year power contract. Caterpillar products are part of the deal, but this highlights an important difference between the two companies.

Caterpillar sells an item, and then it is largely done. Sure, there could be service contracts involved, but the big financial benefit is the sale of a discrete industrial item (be it a backhoe or a generator). Chevron is attempting to build a business that will generate consistent revenues year in and year out for decades. If it can replicate the deal it now has with Microsoft, it could represent an important new avenue for long-term growth.

Cat vs Chevron: What's your time frame?

Stepping back, Cat and Chevron are both working to provide AI with the power it needs. And they are doing so in ways that make sense for each of their businesses. The winner today looks like Cat, which is seeing huge demand for its products. But if you are a long-term dividend investor, you may find that Chevron's approach is more attractive.

The dividend yield may be the key. Investors have bid up Cat's price, pushing its yield down to a miserly 0.8%. Like Chevron, it has increased its dividend annually for more than 30 years, but that yield is even lower than what you'd get from the S&P 500 index (SNPINDEX: ^GSPC). Chevron, by contrast, has a 3.5% yield and a plan that will produce consistent revenues even after the AI construction boom ends. For many, that will be the more attractive model.

Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Caterpillar, Chevron, and Microsoft. The Motley Fool has a disclosure policy.