These 2 AI Stocks Pay Dividends: VRT, ETN

Vertiv (VRT) and Eaton (ETN) reported strong financial results, driven by increasing AI adoption and data center demand. Vertiv surpassed expectations with EPS soaring 77% and sales growing 26%, leading to an upward revision of its 2025 sales guidance to approximately 16% year-over-year growth. Eaton also delivered a record quarter, posting adjusted EPS of $2.95 (up 8% YoY) and 8% organic sales growth. Both companies offer dividends, with Eaton providing a 1.1% annual yield and a strong dividend growth history, while Vertiv yields 0.1%, positioning them as income-generating options within the high-growth AI infrastructure sector.

Analysis

Vertiv (VRT) and Eaton (ETN) are capitalizing on the secular growth in Artificial Intelligence through their exposure to the data center market, translating robust demand into strong financial performance and shareholder returns. Vertiv reported exceptional growth, with earnings per share soaring 77% on a 26% increase in sales, beating consensus expectations. This performance prompted management to raise its full-year 2025 sales guidance to a midpoint of approximately 16% year-over-year growth, reaffirming its five-year outlook based on sustained AI adoption. Similarly, Eaton, an intelligent power management company, delivered a record-breaking second quarter, with adjusted EPS rising 8% year-over-year to $2.95 and organic sales also growing 8%. The company's performance was bolstered by accelerating orders and a growing backlog, achieving record segment margins of 23.9%. While both companies benefit from the same industry tailwind, their capital return profiles differ. Eaton offers a more established dividend, currently yielding 1.1% with a 7.5% five-year annualized growth rate and a payment history stretching back to 1923. Vertiv's dividend is more nascent, yielding a modest 0.1%, but has been increased twice in the last five years, signaling a potential for future growth in capital returns.

Key Decisions for Investors

• Investors seeking to combine AI-driven growth with income should evaluate Eaton and Vertiv as 'picks and shovels' plays on the data center buildout.
• For those prioritizing aggressive top-line growth, Vertiv's 77% EPS surge and upwardly revised guidance for 2025 make it a compelling, albeit lower-yielding, option.
• Income-focused investors may find Eaton more suitable, given its higher 1.1% yield, a consistent 7.5% five-year dividend growth rate, and a century-long history of dividend payments.
• Given that both companies' bullish outlooks are tied to AI adoption, investors should monitor data center capital expenditure trends as a key indicator for continued fundamental strength.