U.S. markets closed
  • S&P Futures

    4,149.00
    +2.75 (+0.07%)
     
  • Dow Futures

    34,219.00
    +36.00 (+0.11%)
     
  • Nasdaq Futures

    13,345.75
    -0.25 (-0.00%)
     
  • Russell 2000 Futures

    2,206.80
    +3.50 (+0.16%)
     
  • Crude Oil

    65.58
    +0.30 (+0.46%)
     
  • Gold

    1,837.20
    +1.10 (+0.06%)
     
  • Silver

    27.72
    +0.05 (+0.17%)
     
  • EUR/USD

    1.2148
    -0.0004 (-0.04%)
     
  • 10-Yr Bond

    1.6240
    +0.0220 (+1.37%)
     
  • Vix

    21.84
    +2.18 (+11.09%)
     
  • GBP/USD

    1.4137
    -0.0007 (-0.05%)
     
  • USD/JPY

    108.7400
    +0.1200 (+0.11%)
     
  • BTC-USD

    56,987.71
    +1,470.68 (+2.65%)
     
  • CMC Crypto 200

    1,531.97
    +1,289.30 (+531.28%)
     
  • FTSE 100

    6,947.99
    -175.69 (-2.47%)
     
  • Nikkei 225

    28,608.59
    0.00 (0.00%)
     

5 Great Dividend Growth Stocks for Your Portfolio

  • Oops!
    Something went wrong.
    Please try again later.
Sweta Killa
·5 min read
  • Oops!
    Something went wrong.
    Please try again later.

Amid the stock market volatility triggered by rising yields and tech sell-off, investors are looking for steady income along with some growth attributes. For them, picking stocks that not only pay out dividends but also increase them on a regular basis appears a winning strategy. These cash payouts are a major source of consistent income for investors when returns from the equity market are at risk.

Why Dividend Growth?

Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market, and thus act as a hedge against economic or political uncertainty as well as stock market volatility. At the same time, these offer downside protection with their consistent increase in payouts.

Additionally, these stocks have superior fundamentals that make dividend growth a quality and promising investment for the long term. These include a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics. Further, a history of strong dividend growth indicates that dividend increase is likely in the future.

Although these stocks do not necessarily have the highest yields, they have outperformed for a longer period than the broader stock market or any other dividend-paying stock. Stocks that have a strong history of dividend growth as opposed to those that offer high yields form a healthy portfolio with more scope for capital appreciation.

As a result, picking dividend growth stocks appear as winning strategies when some other parameters are also included.

5-Year Historical Dividend Growth greater than zero: This selects stocks with a solid dividend growth history.

5-Year Historical Sales Growth greater than zero: This represents stocks with a strong record of growing revenue.

5-Year Historical EPS Growth greater than zero: This represents stocks with a solid earnings growth history.

Next 3–5 Year EPS Growth Rate greater than zero: This represents the rate at which a company’s earnings are expected to grow. Improving earnings should help companies sustain dividend payments.

Price/Cash Flow less than M-Industry: A ratio less than M-industry indicates that the stock is undervalued in that industry and that an investor needs to pay less for better cash flow generated by the company.

52-Week Price Change greater than S&P 500 (Market Weight): This ensures that the stock appreciated more than the S&P 500 over the past one year.

Top Zacks Rank: Stocks having a Zacks Rank #1 (Strong Buy) and 2 (Buy) generally outperform their peers in all types of market environment.

Growth Score of B or better: Our research shows that stocks with a Growth Score of A or B when combined with a Zacks Rank #1 or 2 offer the best upside potential.

Just these few criteria narrowed down the universe from over 7,700 stocks to just 28.

Here are five of the 28 stocks that fit the bill:

Florida-based Lennar Corporation LEN is engaged in homebuilding and financial services in the United States. The company has seen solid earnings estimate revision of $1.61 over the past month for the fiscal year (ending November 2021) and has an expected earnings growth rate of 39.9%. Lennar sports a Zacks Rank #1 and has a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.

Pennsylvania-based Vishay Intertechnology Inc. VSH is a global manufacturer and supplier of discrete semiconductors and passive components. The company saw positive earnings estimate revision of a penny over the past 30 days for this year and has an estimated earnings growth rate of 88%. The stock has a Zacks Rank #1 and a Growth Score of B.

Indiana-based Hillenbrand Inc HI is a global diversified industrial company with multiple market-leading brands that serve a wide variety of industries across the globe. The company has an estimated earnings growth rate of 8.8% for the fiscal year ending September 2021 and delivered a four-quarter earnings surprise of 45.99%, on average. The stock has a Zacks Rank #2 and a Growth Score of A.

Colorado-based TeleTech Holdings Inc. TTEC is a customer experience, technology and services company that focuses on the design, implementation and delivery of customer experiences. The company saw solid earnings estimate revision of $1.11 over the past 30 days for this year and has an estimated earnings growth rate of 8.9%. The stock has a Zacks Rank #1 and a Growth Score of A.

California-based Avery Dennison Corporation AVY produces pressure-sensitive materials, and a variety of tickets, tags, labels and other converted products. The company saw positive earnings estimate revision of 3 cents over the past 30 days for this year and has an estimated earnings growth rate of 11.8%. The stock has a Zacks Rank #2 and a Growth Score of A.

You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.

The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.

Click here to sign up for a free trial to the Research Wizard today.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Avery Dennison Corporation (AVY) : Free Stock Analysis Report
 
TeleTech Holdings, Inc. (TTEC) : Free Stock Analysis Report
 
Lennar Corporation (LEN) : Free Stock Analysis Report
 
Vishay Intertechnology, Inc. (VSH) : Free Stock Analysis Report
 
Hillenbrand Inc (HI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.