U.S. Markets open in 2 hrs 28 mins

Zacks.com featured highlights: Tyson Foods, Ross Stores, EnerSys, EMCOR Group and Watts Water Technologies

Zacks Equity Research

For Immediate Release

Chicago, IL – August 24, 2016 - Stocks in this week’s article include: Tyson Foods Inc. (TSN), Ross Stores Inc. (ROST), EnerSys (ENS), EMCOR Group Inc. ( EME) and Watts Water Technologies Inc. (WTS).

Screen of the Week of Zacks Investment Research:

Forget High Dividend Yields, Buy These Stocks with Dividend Growth

Be it a bull or a bear market, investors mostly love dividend paying stocks. After all, who doesn’t like a steady stream of current income along with capital appreciation?

According to Josh Peters, the author of The Ultimate Dividend Playbook,“dividends may not be the only path for an individual investor’s success, but if there’s a better one,that is yet to be found.”

But investors should note that not all dividend stocks will give them the same protection or serve the same purpose. Yes, stable, mature and profitable companies are normally known as dividend destinations. These companies are usually good for value investing and are in demand when volatility flares up.

Still, investors should note that companies consistently raising dividends appear safer options over the long term than companies offering higher payouts.

Why Does Dividend Growth Win Over Higher Payout?

Notably, companies that raise dividend regularly appear steadier than those that offer higher yields. These companies are generally ultra-strong in nature which enables them to hike dividend consistently. In a market crash, not only do these companies stand out, they also navigate volatility with ease.

On the other hand, if the Fed hikes interest rates, safer investing options such as government bonds start yielding higher. This in turn dull the lure for high dividend stocks.

Also, in most cases high-yielding stocks are not safe. These even may cut down their payout in an ensuing period, if the operating environment turns sour.

The Winning Strategy

In order to shortlist stocks that are exhibiting a dividend growth trend, we chose the following as our primary screening parameters.

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

Most Recent Payout Ratio less than M-Industry: This is the measure of dividend payment as a percentage of earnings. A relatively low payout ratio indicates the company’s ability to increase dividend even during tough times.

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

5-Year Historical EPS Growth greater than zero: This parameter shortlists 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.

In addition, we place a few other criteria that lead us to some likely outperformers.

Zacks Rank Less than or Equal to 2: Stocks having a Zacks Rank #1 (Strong Buy) or 2 (Buy) generally perform better than their peers in all types of market environment.

VGM Style Score of B or better: This is simply a weighted combination of Value, Growth and Momentum.

Market Capitalization greater than $2 billion: We have eliminated small-cap stocks to ensure better flexibility and tradability.

52-Week Price Change greater than S&P 500 (Median): This ensures that the stock appreciated more than the S&P 500 over the past one year and helps us to pick some market-beating stocks.

A handful of criteria has narrowed down the universe from over 7,700 stocks to around six.

Here are the six stocks:

Tyson Foods Inc. (TSN): This is a producer, processor and seller of chicken and poultry-based food products. It has a Zacks Rank #2 and a VGM score of A.

Ross Stores Inc. (ROST): This runs a chain of off-price retail apparel and home accessories stores. It has a Zacks Rank #2 and a VGM score of A.

EnerSys (ENS) : The company is into the stored energy solutions for industrial applications. It has a Zacks Rank #2 and a VGM score of A.

EMCOR Group Inc. (EME): The company is into the designing, operating and maintaining of mechanical and electrical systems. It also has a Zacks Rank #2 and a VGM score of A.

Watts Water Technologies Inc. (WTS): This is into designing, manufacturing and selling a line of products related to the water quality and water regulation. It also has a Zacks Rank #2 and a VGM score of A.

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

Zacks Restaurant Recommendations: In addition to dining at these special places, you can feast on their stock shares. A Zacks Special Report spotlights 5 recent IPOs to watch plus 2 stocks that offer immediate promise in a booming sector. Download it free »

Sign up now for your free trial today and start picking better stocks immediately. And with the backtesting feature, you can test your ideas to see how you can improve your trading in both up markets and down markets. Don’t wait for the market to get better before you decide to do better. Start learning how to be a better trader today: https://at.zacks.com/?id=111

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.

About Screen of the Week

Zacks.com created the first and best screening system on the web earning the distinction as the "#1 site for screening stocks" by Money Magazine. But powerful screening tools is just the start. That is why Zacks created the Screen of the Week to highlight profitable stock picking strategies that investors can actively use. Each week, Zacks Profit from the Pros free email newsletter shares a new screening strategy. Learn more about it here https://at.zacks.com/?id=112

About Zacks

Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978. The later formation of the Zacks Rank, a proprietary stock picking system; continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter; Profit from the Pros. In short, it's your steady flow of Profitable ideas GUARANTEED to be worth your time! Click here for your free subscription to Profit from the Pros.

Follow us on Twitter: https://twitter.com/zacksresearch

Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Contact: Jim Giaquinto
Company: Zacks.com
Phone: 312-265-9268
Email: pr@zacks.com

Visit: https://www.zacks.com/performance

Zacks.com provides investment resources and informs you of these resources, which you may choose to use in making your own investment decisions. Zacks is providing information on this resource to you subject to the Zacks "Terms and Conditions of Service" disclaimer. www.zacks.com/disclaimer .

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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
TYSON FOODS A (TSN): Free Stock Analysis Report
ROSS STORES (ROST): Free Stock Analysis Report
ENERSYS INC (ENS): Free Stock Analysis Report
EMCOR GROUP INC (EME): Free Stock Analysis Report
WATTS WATER TEC (WTS): Free Stock Analysis Report
To read this article on Zacks.com click here.