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5 Great Dividend Growth Stocks to Keep Volatility at Bay
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Given the super-easy Fed policies, the appeal for dividend investing has been on the rise. This is because this strategy is a major source of consistent income for investors in any type of market, though it doesn’t offer dramatic price appreciation.
In particular, investors should zero in on companies that not only offer dividends but also consistently increase their payouts. 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.
Inside the 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.
Furthermore, these have a long history of outperformance than the broader stock market or any other dividend-paying stock over the long term. However, it does not necessarily mean that they have the highest yields.
As a result, picking stocks that offer dividend growth appears as a winning strategy 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 has appreciated more than the S&P 500 over the past year.
Top Zacks Rank: Stocks having a Zacks Rank #1 (Strong Buy) and 2 (Buy) generally outperform their peers in all types of market environments.
Growth Scoreof 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 15.
Here are five of the 15 stocks that fit the bill:
California-based ResMed Inc. (RMD - Free Report) develops, manufactures, distributes and markets medical devices and cloud-based software solutions that diagnose, treat and manage respiratory disorders comprising sleep-disordered breathing, chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases. The company has an estimated earnings growth rate of 6.93% for the fiscal year (ending June 2021) and delivered an average earnings surprise of 28.88% for the past four quarters. It has a Zacks Rank #2 and Growth Score of B. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Washington-based Microsoft Corporation (MSFT - Free Report) is one of the largest broad-based technology providers in the world. The company saw solid earnings estimate revision of 25 cents over the past 30 days for the fiscal year (ending June 2021) and has an estimated earnings growth rate of 15.28%. The stock has a Zacks Rank #2 and Growth Score of B.
California-based Activision Blizzard Inc. is a leading developer and publisher of console, online and mobile games. The stock saw positive earnings estimate revision of 11 cents over the past 30 days for this year and has estimated earnings growth of 47.56%. It has a Zacks Rank #2 and Growth Score of B.
Minnesota-based Best Buy Company Inc. (BBY - Free Report) is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services. The company saw solid earnings estimate revision of 4 cents over the past 30 days for the fiscal year (ending January 2021) and has an estimated earnings growth rate of 17.96%. The stock has a Zacks Rank #2 and Growth Score of A.
Texas-based Insperity Inc. (NSP - Free Report) provides an array of human resources and business solutions designed to improve business performance. The company has seen upward earnings estimate revision of a couple of cents over the past 30 days for this year and delivered a four-quarter earnings surprise of 37.09%, on average. The stock has a Zacks Rank #2 and 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.
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.
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5 Great Dividend Growth Stocks to Keep Volatility at Bay
Given the super-easy Fed policies, the appeal for dividend investing has been on the rise. This is because this strategy is a major source of consistent income for investors in any type of market, though it doesn’t offer dramatic price appreciation.
In particular, investors should zero in on companies that not only offer dividends but also consistently increase their payouts. 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.
Inside the 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.
Furthermore, these have a long history of outperformance than the broader stock market or any other dividend-paying stock over the long term. However, it does not necessarily mean that they have the highest yields.
As a result, picking stocks that offer dividend growth appears as a winning strategy 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 has appreciated more than the S&P 500 over the past year.
Top Zacks Rank: Stocks having a Zacks Rank #1 (Strong Buy) and 2 (Buy) generally outperform their peers in all types of market environments.
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 15.
Here are five of the 15 stocks that fit the bill:
California-based ResMed Inc. (RMD - Free Report) develops, manufactures, distributes and markets medical devices and cloud-based software solutions that diagnose, treat and manage respiratory disorders comprising sleep-disordered breathing, chronic obstructive pulmonary disease, neuromuscular disease and other chronic diseases. The company has an estimated earnings growth rate of 6.93% for the fiscal year (ending June 2021) and delivered an average earnings surprise of 28.88% for the past four quarters. It has a Zacks Rank #2 and Growth Score of B. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
Washington-based Microsoft Corporation (MSFT - Free Report) is one of the largest broad-based technology providers in the world. The company saw solid earnings estimate revision of 25 cents over the past 30 days for the fiscal year (ending June 2021) and has an estimated earnings growth rate of 15.28%. The stock has a Zacks Rank #2 and Growth Score of B.
California-based Activision Blizzard Inc. is a leading developer and publisher of console, online and mobile games. The stock saw positive earnings estimate revision of 11 cents over the past 30 days for this year and has estimated earnings growth of 47.56%. It has a Zacks Rank #2 and Growth Score of B.
Minnesota-based Best Buy Company Inc. (BBY - Free Report) is a multinational specialty retailer of consumer electronics, home office products, entertainment software, communication, food preparation, wellness, heath, security, appliances and related services. The company saw solid earnings estimate revision of 4 cents over the past 30 days for the fiscal year (ending January 2021) and has an estimated earnings growth rate of 17.96%. The stock has a Zacks Rank #2 and Growth Score of A.
Texas-based Insperity Inc. (NSP - Free Report) provides an array of human resources and business solutions designed to improve business performance. The company has seen upward earnings estimate revision of a couple of cents over the past 30 days for this year and delivered a four-quarter earnings surprise of 37.09%, on average. The stock has a Zacks Rank #2 and 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.