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Thanksgiving is coming up, and it’s time to stuff dividend stocks with strong growth prospects in your portfolio for market-beating returns. This is especially true as the holiday-shortened week is usually a bullish feast for stock investors, even with low volumes, as consumer spending is expected to rise.
Stocks with a history of dividend growth year over year form a healthy portfolio with a greater scope of capital appreciation as opposed to simple dividend-paying stocks or those with high yields. We have selected five dividend growth stocks — Archer-Daniels-Midland Company (ADM - Free Report) , McKesson Corporation (MCK - Free Report) , ParkerHannifin Corporation (PH - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) and Darden Restaurants Inc. (DRI - Free Report) — that could be compelling picks for your portfolio this Thanksgiving.
Inside Dividend Growth Strategy
Stocks that have a strong history of dividend growth belong to mature companies 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 a 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.
As a result, picking dividend growth stocks 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 revenues.
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 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 18.
Here are five of the 18 stocks that fit the bill:
Illinois-based Archer-Daniels is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM has seen a solid earnings estimate revision of 51 cents for this year and an expected earnings growth rate of 42.58%.
California-based McKesson is a health care services and information technology company. The stock has seen a solid earnings estimate revision of 35 cents over the past 30 days for the fiscal year (ending March 2023) and has an expected earnings growth rate of 4.5%.
McKesson has a Zacks Rank #2 and Growth Score of A.
Ohio-based ParkerHannifin is a global diversified manufacturer of motion & control technologies and systems. It provides precision-engineered solutions for a wide variety of mobile, industrial and aerospace markets. The stock saw solid earnings estimate revision of 56 cents over the past 30 days for the fiscal year (ending June 2023) and has an estimated earnings growth rate of 2.19%.
ParkerHannifin has a Zacks Rank #2 and Growth Score of B.
Virginia-based Booz Allen is engaged in providing management and technology consulting services to the U.S. government in the defense, intelligence and civil markets. The company saw posiitve earnings estimate revision of 9 cents over the past 30 days for the fiscal year (March 2020) with an estimated earnings growth rate of 5.7%.
Booz Allen has a Zacks Rank #2 and Growth Score of A.
Florida-based Darden Restaurants is one of the largest casual dining restaurant operators worldwide. The company has an expected earnings growth rate of 3.78% for the fiscal year (ending May 2023).
Darden Restaurants has a Zacks Rank #2 and Growth Score of B.
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.
Image: Bigstock
5 Solid Dividend Growth Stocks for Thanksgiving
Thanksgiving is coming up, and it’s time to stuff dividend stocks with strong growth prospects in your portfolio for market-beating returns. This is especially true as the holiday-shortened week is usually a bullish feast for stock investors, even with low volumes, as consumer spending is expected to rise.
Stocks with a history of dividend growth year over year form a healthy portfolio with a greater scope of capital appreciation as opposed to simple dividend-paying stocks or those with high yields. We have selected five dividend growth stocks — Archer-Daniels-Midland Company (ADM - Free Report) , McKesson Corporation (MCK - Free Report) , ParkerHannifin Corporation (PH - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) and Darden Restaurants Inc. (DRI - Free Report) — that could be compelling picks for your portfolio this Thanksgiving.
Inside Dividend Growth Strategy
Stocks that have a strong history of dividend growth belong to mature companies 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 a 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.
As a result, picking dividend growth stocks 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 revenues.
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 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 18.
Here are five of the 18 stocks that fit the bill:
Illinois-based Archer-Daniels is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM has seen a solid earnings estimate revision of 51 cents for this year and an expected earnings growth rate of 42.58%.
Archer-Daniels has a Zacks Rank #1 and Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
California-based McKesson is a health care services and information technology company. The stock has seen a solid earnings estimate revision of 35 cents over the past 30 days for the fiscal year (ending March 2023) and has an expected earnings growth rate of 4.5%.
McKesson has a Zacks Rank #2 and Growth Score of A.
Ohio-based ParkerHannifin is a global diversified manufacturer of motion & control technologies and systems. It provides precision-engineered solutions for a wide variety of mobile, industrial and aerospace markets. The stock saw solid earnings estimate revision of 56 cents over the past 30 days for the fiscal year (ending June 2023) and has an estimated earnings growth rate of 2.19%.
ParkerHannifin has a Zacks Rank #2 and Growth Score of B.
Virginia-based Booz Allen is engaged in providing management and technology consulting services to the U.S. government in the defense, intelligence and civil markets. The company saw posiitve earnings estimate revision of 9 cents over the past 30 days for the fiscal year (March 2020) with an estimated earnings growth rate of 5.7%.
Booz Allen has a Zacks Rank #2 and Growth Score of A.
Florida-based Darden Restaurants is one of the largest casual dining restaurant operators worldwide. The company has an expected earnings growth rate of 3.78% for the fiscal year (ending May 2023).
Darden Restaurants has a Zacks Rank #2 and Growth Score of B.
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.