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5 Stocks That Boast Solid History of Dividend Growth
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Wall Street has been on a blistering rally, with market rotation from the technology sector to the laggards being the latest theme. Though the Fed is expected to cut rates anytime soon, providing a considerable boost to the stock market, the U.S. presidential election in November will trigger volatility. Dividend investing will thus continue to be in vogue.
Though the strategy does not offer dramatic price appreciation, it is a major source of consistent income for investors in any market. In particular, focusing on the growth level in this strategy leads to higher returns. Stocks with a strong history of year-over-year dividend growth 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 — Walmart Inc. (WMT - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) , Vertiv Holdings Co (VRT - Free Report) and Cabot Corporation (CBT - Free Report) — that could be compelling picks.
Inside Dividend Growth Strategy
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market and 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) or 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 13.
Here are five of the 13 stocks that fit the bill:
Arkansas-based Walmart has evolved from being just a traditional brick-and-mortar retailer into an omnichannel player. It is engaged in the operation of retail, wholesale and other units worldwide. The company has an estimated earnings growth rate of 9.45% for the fiscal year ending January 2025 and delivered an average earnings surprise of 8.34% in the last four reported quarters.
Canada-based Agnico Eagle is a gold producer with mining operations in Canada, Mexico and Finland and exploration activities in Canada, Europe, Latin America and the United States. It saw a solid earnings estimate revision of 12 cents over the past seven days for the fiscal year ending January 2024. The company has an estimated earnings growth rate of 47.1%.
AEM currently has a Zacks Rank #2 and a Growth Score of A.
Virginia-based Booz Allen is a provider of management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber expertise to the United States and international governments, corporations and not-for-profit organizations. BAH has an estimated earnings growth rate of 10% for the fiscal year ending March 2025 and delivered an average earnings surprise of 12.47% in the past four quarters.
Currently, Booz Allen has a Zacks Rank #2 and a Growth Score of B.
Ohio-based Vertiv Holdings provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services. The company saw a positive earnings estimate revision of a couple of cents over the past month for this year and has an estimated earnings growth rate of 37.85%.
Vertiv Holdings has a Zacks Rank #2 and a Growth Score of A.
Morocco-based Cabot is a leading global specialty chemicals and performance materials company. The company offers a broad range of products and solutions, catering to major industries such as transportation, infrastructure, environment and consumer. Cabot has an expected earnings growth rate of 26.02% for the fiscal year ending September 2024 and delivered an average earnings surprise of 3.80% in the last four reported quarters.
Cabot 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.
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 Stocks That Boast Solid History of Dividend Growth
Wall Street has been on a blistering rally, with market rotation from the technology sector to the laggards being the latest theme. Though the Fed is expected to cut rates anytime soon, providing a considerable boost to the stock market, the U.S. presidential election in November will trigger volatility. Dividend investing will thus continue to be in vogue.
Though the strategy does not offer dramatic price appreciation, it is a major source of consistent income for investors in any market. In particular, focusing on the growth level in this strategy leads to higher returns. Stocks with a strong history of year-over-year dividend growth 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 — Walmart Inc. (WMT - Free Report) , Agnico Eagle Mines Limited (AEM - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) , Vertiv Holdings Co (VRT - Free Report) and Cabot Corporation (CBT - Free Report) — that could be compelling picks.
Inside Dividend Growth Strategy
Stocks that have a strong history of dividend growth belong to mature companies, which are less susceptible to large swings in the market and 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) or 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 13.
Here are five of the 13 stocks that fit the bill:
Arkansas-based Walmart has evolved from being just a traditional brick-and-mortar retailer into an omnichannel player. It is engaged in the operation of retail, wholesale and other units worldwide. The company has an estimated earnings growth rate of 9.45% for the fiscal year ending January 2025 and delivered an average earnings surprise of 8.34% in the last four reported quarters.
Presently, WMT has a Zacks Rank #2 and a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Canada-based Agnico Eagle is a gold producer with mining operations in Canada, Mexico and Finland and exploration activities in Canada, Europe, Latin America and the United States. It saw a solid earnings estimate revision of 12 cents over the past seven days for the fiscal year ending January 2024. The company has an estimated earnings growth rate of 47.1%.
AEM currently has a Zacks Rank #2 and a Growth Score of A.
Virginia-based Booz Allen is a provider of management and technology consulting, analytics, engineering, digital solutions, mission operations, and cyber expertise to the United States and international governments, corporations and not-for-profit organizations. BAH has an estimated earnings growth rate of 10% for the fiscal year ending March 2025 and delivered an average earnings surprise of 12.47% in the past four quarters.
Currently, Booz Allen has a Zacks Rank #2 and a Growth Score of B.
Ohio-based Vertiv Holdings provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services. The company saw a positive earnings estimate revision of a couple of cents over the past month for this year and has an estimated earnings growth rate of 37.85%.
Vertiv Holdings has a Zacks Rank #2 and a Growth Score of A.
Morocco-based Cabot is a leading global specialty chemicals and performance materials company. The company offers a broad range of products and solutions, catering to major industries such as transportation, infrastructure, environment and consumer. Cabot has an expected earnings growth rate of 26.02% for the fiscal year ending September 2024 and delivered an average earnings surprise of 3.80% in the last four reported quarters.
Cabot 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.