We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you accept our Privacy Policy and Terms of Service, revised from time to time, and you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 Dividend Stocks That Investors May Bank On for Growth
Read MoreHide Full Article
Dividend investing remains one of the hottest segments of the stock market. Though U.S. stocks have been hovering near record highs on Trump’s growth policies and ongoing AI adoption, geopolitics, fears of a trade war, inflationary pressure and uncertain Fed moves continue to weigh on investors’ sentiment.
In such a scenario, dividends are major sources of consistent income for investors though they do not offer dramatic price appreciation. Stocks backed by regular dividends can reduce the volatility of a portfolio and also tend to outperform in a choppy market. In particular, focusing on the growth level in this strategy leads to higher returns. Zeroing in on stocks with a history of dividend growth leads to a healthy portfolio with a greater scope of capital appreciation, as opposed to simple dividend-paying stocks or those with high yields.
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.
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 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 seven.
Here are five of the seven stocks that fit the bill:
New York-based Tapestry, which was formerly known as Coach, is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. The stock saw a solid earnings estimate revision of 7 cents over the past seven days for the fiscal year (ending June 2025) and has an estimated earnings growth rate of 14.4%.
Massachusetts-based RTX is an aerospace and defense company, providing advanced systems and services for commercial, military and government customers worldwide. The stock saw a solid earnings estimate revision of 6 cents over the past 30 days for this year with an estimated earnings growth rate of 7%.
RTX has a Zacks Rank #2 and a Growth Score of B.
Ohio-based Cintas provides specialized services to businesses of all types throughout North America. It also operates in Europe, Asia and Latin America. The company designs, manufactures and implements corporate identity uniform programs. It also provides entrance mats, restroom supplies, promotional products and first aid and safety products for diversified businesses. Cintas has an estimated earnings growth rate of 13.7% for the fiscal year (ending May 2025) and delivered an average earnings surprise of 7.70% for the past four quarters.
Cintas has a Zacks Rank #2 and a Growth Score of B.
California-based Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices focused on complex digital and mixed-signal complementary metal oxide semiconductor-based devices and analog III-V based products. The stock saw a positive earnings estimate revision by a penny for the fiscal year (ending October 2025) over the past 30 days and has an expected earnings growth rate of 29.6%.
Broadcom has a Zacks Rank #2 and a Growth Score of B.
New York-based Corning started as a glass business that was reincorporated in 1936. The company has since developed its glass technologies to produce advanced glass substrates that are used in a large number of applications across multiple markets. The stock saw positive earnings estimate revision of a penny for this year over the past 30 days and has an expected earnings growth rate of 18.9%.
Corning has a Zacks Rank #2 and a 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 Dividend Stocks That Investors May Bank On for Growth
Dividend investing remains one of the hottest segments of the stock market. Though U.S. stocks have been hovering near record highs on Trump’s growth policies and ongoing AI adoption, geopolitics, fears of a trade war, inflationary pressure and uncertain Fed moves continue to weigh on investors’ sentiment.
In such a scenario, dividends are major sources of consistent income for investors though they do not offer dramatic price appreciation. Stocks backed by regular dividends can reduce the volatility of a portfolio and also tend to outperform in a choppy market. In particular, focusing on the growth level in this strategy leads to higher returns. Zeroing in on stocks with a history of dividend growth leads to 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 — Tapestry, Inc. (TPR - Free Report) , RTX Corporation (RTX - Free Report) , Cintas Corporation (CTAS - Free Report) , Broadcom Inc. (AVGO - Free Report) and Corning Incorporated (GLW - Free Report) — that could be solid choices.
Why is Dividend Growth Better?
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.
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 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 seven.
Here are five of the seven stocks that fit the bill:
New York-based Tapestry, which was formerly known as Coach, is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. The stock saw a solid earnings estimate revision of 7 cents over the past seven days for the fiscal year (ending June 2025) and has an estimated earnings growth rate of 14.4%.
Tapestry has a Zacks Rank #2 and a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Massachusetts-based RTX is an aerospace and defense company, providing advanced systems and services for commercial, military and government customers worldwide. The stock saw a solid earnings estimate revision of 6 cents over the past 30 days for this year with an estimated earnings growth rate of 7%.
RTX has a Zacks Rank #2 and a Growth Score of B.
Ohio-based Cintas provides specialized services to businesses of all types throughout North America. It also operates in Europe, Asia and Latin America. The company designs, manufactures and implements corporate identity uniform programs. It also provides entrance mats, restroom supplies, promotional products and first aid and safety products for diversified businesses. Cintas has an estimated earnings growth rate of 13.7% for the fiscal year (ending May 2025) and delivered an average earnings surprise of 7.70% for the past four quarters.
Cintas has a Zacks Rank #2 and a Growth Score of B.
California-based Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices focused on complex digital and mixed-signal complementary metal oxide semiconductor-based devices and analog III-V based products. The stock saw a positive earnings estimate revision by a penny for the fiscal year (ending October 2025) over the past 30 days and has an expected earnings growth rate of 29.6%.
Broadcom has a Zacks Rank #2 and a Growth Score of B.
New York-based Corning started as a glass business that was reincorporated in 1936. The company has since developed its glass technologies to produce advanced glass substrates that are used in a large number of applications across multiple markets. The stock saw positive earnings estimate revision of a penny for this year over the past 30 days and has an expected earnings growth rate of 18.9%.
Corning has a Zacks Rank #2 and a 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
.