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7 Dividend Stocks That Promise Stability and Growth
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Ahead of the presidential elections, dividend investing is again in vogue. Investors are looking for both income and growth in their portfolios irrespective of market conditions. This can easily be achieved by honing in on stocks that not only offer dividends but also consistently increase their payout.
Inside Dividend Growth Strategy
Stocks that have a strong history of dividend growth as opposed to those that pays high yields form a healthy portfolio with more scope for capital appreciation. This is because these stocks act as a hedge against economic or political uncertainty and stock market volatility. Simultaneously, these offer outsized payouts or sizable yields on a regular basis irrespective of the market direction.
Additionally, these pose a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics. All these superior fundamentals make dividend growth a promising investment amid market turbulence. Further, a history of strong dividend growth indicates that a future hike is likely. This makes the portfolio healthy and safe.
Furthermore, these have a long history of outperformance over the long term. However, it does not necessarily mean that they have the highest yields.
Here are the screening parameters that could result in a winning dividend growth portfolio:
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 to 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 a better cash flow generated by the company.
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.
Zacks Rank Less than 3: Stocks having a Zacks Rank #1 (Strong Buy) and 2 (Buy) generally outperform 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. This when combined with a Zacks Rank #1 or #2 offers the best upside potential.
Market Capitalization greater than $2 billion: We have eliminated small caps stocks to ensure better flexibility and tradability.
Here are seven of the 17 stocks that fit the bill:
Activision Blizzard Inc. : This California-based company is a worldwide pure-play online and console game publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry. The stock saw solid earnings estimate revision of 18 cents over the past 90 days for this year with an expected earnings growth rate of 52.7%. It has a Zacks Rank #1 (Strong Buy) and a VGM Style Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intel (INTC - Free Report) : This California-based company is one of the world's largest semiconductor chip maker. It saw solid earnings estimate revision of 15 cents over the past three months, with an expected earnings growth of 14.37%. It has a VGM Style Score of B and a Zacks Rank #2 (Buy).
Packaging Corporation of America (PKG - Free Report) : This Illinois-based company is one of the largest producers of containerboard in the United States and one of the largest manufacturers of corrugated packaging products. The stock saw earnings estimate revision of a nickel over the past 90 days for this year and is expected to grow at an above-average growth rate of 6.32%. It has a Zacks Rank #2 and a VGM Style Score of B.
Thermo Fisher Scientific Inc. (TMO - Free Report) : This Massachusetts-based company is a provider of analytical instruments, equipment, reagents and consumables, software, and services for research, manufacturing, analysis, discovery, and diagnostics worldwide. It saw positive earnings estimate revision of a nickel for this year over the past 30 days, with an expected growth rate of 10.91%. Thermo Fisher has a Zacks Rank #2 and a VGM Style Score of B.
Dick's Sporting Goods Inc. (DKS - Free Report) : This Pennsylvania-based company is a leading full-line sporting goods retailer in the United States. The stock saw positive earnings estimate revision of 22 cents over the past 90 days for this fiscal year and delivered earnings surprises in two of the past four quarters, with an average beat of 4.68%. The stock has a Zacks Rank #1 and a VGM Style Score of A.
Gentex Corp. (GNTX - Free Report) : This Michigan-based company is a provider of high-quality products to the worldwide automotive industry and North American fire protection market. It delivered an average positive earnings surprise of 5.31% over the past four quarters and has an above-industry earnings growth rate of 11.51% for this year. Gentex has a Zacks Rank #2 and a VGM Style Score of A.
Republic Services Inc. (RSG - Free Report) : This Arizona-based company is a leading provider of services in the domestic non-hazardous solid waste industry. It delivered an average positive earnings surprise of 1.04% over the past four quarters and its earnings are expected to growth at rate of 5.10% for this year. The stock has a Zacks Rank #2 and a VGM Style Score of C.
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.
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 »
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7 Dividend Stocks That Promise Stability and Growth
Ahead of the presidential elections, dividend investing is again in vogue. Investors are looking for both income and growth in their portfolios irrespective of market conditions. This can easily be achieved by honing in on stocks that not only offer dividends but also consistently increase their payout.
Inside Dividend Growth Strategy
Stocks that have a strong history of dividend growth as opposed to those that pays high yields form a healthy portfolio with more scope for capital appreciation. This is because these stocks act as a hedge against economic or political uncertainty and stock market volatility. Simultaneously, these offer outsized payouts or sizable yields on a regular basis irrespective of the market direction.
Additionally, these pose a sustainable business model, a long track of profitability, rising cash flows, good liquidity, a strong balance sheet and some value characteristics. All these superior fundamentals make dividend growth a promising investment amid market turbulence. Further, a history of strong dividend growth indicates that a future hike is likely. This makes the portfolio healthy and safe.
Furthermore, these have a long history of outperformance over the long term. However, it does not necessarily mean that they have the highest yields.
Here are the screening parameters that could result in a winning dividend growth portfolio:
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 to 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 a better cash flow generated by the company.
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.
Zacks Rank Less than 3: Stocks having a Zacks Rank #1 (Strong Buy) and 2 (Buy) generally outperform 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. This when combined with a Zacks Rank #1 or #2 offers the best upside potential.
Market Capitalization greater than $2 billion: We have eliminated small caps stocks to ensure better flexibility and tradability.
Here are seven of the 17 stocks that fit the bill:
Activision Blizzard Inc. : This California-based company is a worldwide pure-play online and console game publisher with leading market positions across all categories of the rapidly growing interactive entertainment software industry. The stock saw solid earnings estimate revision of 18 cents over the past 90 days for this year with an expected earnings growth rate of 52.7%. It has a Zacks Rank #1 (Strong Buy) and a VGM Style Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intel (INTC - Free Report) : This California-based company is one of the world's largest semiconductor chip maker. It saw solid earnings estimate revision of 15 cents over the past three months, with an expected earnings growth of 14.37%. It has a VGM Style Score of B and a Zacks Rank #2 (Buy).
Packaging Corporation of America (PKG - Free Report) : This Illinois-based company is one of the largest producers of containerboard in the United States and one of the largest manufacturers of corrugated packaging products. The stock saw earnings estimate revision of a nickel over the past 90 days for this year and is expected to grow at an above-average growth rate of 6.32%. It has a Zacks Rank #2 and a VGM Style Score of B.
Thermo Fisher Scientific Inc. (TMO - Free Report) : This Massachusetts-based company is a provider of analytical instruments, equipment, reagents and consumables, software, and services for research, manufacturing, analysis, discovery, and diagnostics worldwide. It saw positive earnings estimate revision of a nickel for this year over the past 30 days, with an expected growth rate of 10.91%. Thermo Fisher has a Zacks Rank #2 and a VGM Style Score of B.
Dick's Sporting Goods Inc. (DKS - Free Report) : This Pennsylvania-based company is a leading full-line sporting goods retailer in the United States. The stock saw positive earnings estimate revision of 22 cents over the past 90 days for this fiscal year and delivered earnings surprises in two of the past four quarters, with an average beat of 4.68%. The stock has a Zacks Rank #1 and a VGM Style Score of A.
Gentex Corp. (GNTX - Free Report) : This Michigan-based company is a provider of high-quality products to the worldwide automotive industry and North American fire protection market. It delivered an average positive earnings surprise of 5.31% over the past four quarters and has an above-industry earnings growth rate of 11.51% for this year. Gentex has a Zacks Rank #2 and a VGM Style Score of A.
Republic Services Inc. (RSG - Free Report) : This Arizona-based company is a leading provider of services in the domestic non-hazardous solid waste industry. It delivered an average positive earnings surprise of 1.04% over the past four quarters and its earnings are expected to growth at rate of 5.10% for this year. The stock has a Zacks Rank #2 and a VGM Style Score of C.
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.
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 »