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5 Market-Beating Dividend Stocks for Steady Growth
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Though the stock market are at all-time highs, geopolitics, Washington turmoil, and Fed’s dovish views make dividend investing a perfect choice. These cash payouts are major sources of consistent income for investors when returns from the equity market are at risk.
In particular, stocks that have a strong history of dividend growth as opposed to those that pay high yields form a healthy portfolio with more scope for capital appreciation.
Why Dividend Growth Stocks?
Dividend growth stocks offer the best of both worlds –– potential for capital appreciation and rising income even in a volatile market. This is because these stocks belong to mature companies, which are less susceptible to large swings in the market, while simultaneously offer outsized payouts or sizable yields on a regular basis irrespective of the market direction.
Dividend growth reflects 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 stocks quality and promising investments for the long term. Further, a history of strong dividend growth indicates that hike is likely in the future.
Though these stocks have a long history of outperformance compared with the broader stock market or any other dividend paying stock, it does not necessarily mean that they have the highest yields.
As a result, picking dividend growth stocks appear as winning strategies 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 appreciated more than the S&P 500 over the past one 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.
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.
Here are five of the 28 stocks that fit the bill:
H&R Block Inc. (HRB - Free Report) : This Missouri-based H&R Block is a diversified company involved in tax return preparation, electronic filing of income tax returns and other tax-related services. The company has seen strong earnings estimate revision of 23 cents over the past 90 days for this fiscal year and delivered an average positive earnings surprise of 8.95% in three of the past four quarters. It has a VGM Style Score of A and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lazard Ltd. (LAZ - Free Report) : This Bermuda-based company is a preeminent international financial advisory and asset management firm that has long specialized in crafting solutions to the complex financial and strategic challenges of their clients. The company has seen solid earnings estimate revision of 15 cents over the past 90 days for this year and has an expected earnings growth rate of 11.25%. It has a Zacks Rank #2 and a VGM Style Score of A.
Westlake Chemical Corporation (WLK - Free Report) : This Texas-based company is a vertically integrated international manufacturer and supplier of petrochemicals, polymers and fabricated products. It has seen solid earnings estimate revision of 32 cents for this year over the past three months, with an expected earnings growth rate of 16.28%. The stock has a Zacks Rank #2 and a VGM Style Score of B.
Aetna Inc. : This Connecticut-based company is one of the nation's largest health benefits companies and nation's largest insurance and financial services organizations. The stock has seen positive earnings estimate revision of 16 cents over the past 90 days for this year with an expected earnings growth rate of 9.28%. The stock 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 3.58% over the past four quarters and has seen solid earnings estimate revision of a couple of cents for this year over the past three months. The stock has a Zacks Rank #2 and a VGM Style 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.
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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5 Market-Beating Dividend Stocks for Steady Growth
Though the stock market are at all-time highs, geopolitics, Washington turmoil, and Fed’s dovish views make dividend investing a perfect choice. These cash payouts are major sources of consistent income for investors when returns from the equity market are at risk.
In particular, stocks that have a strong history of dividend growth as opposed to those that pay high yields form a healthy portfolio with more scope for capital appreciation.
Why Dividend Growth Stocks?
Dividend growth stocks offer the best of both worlds –– potential for capital appreciation and rising income even in a volatile market. This is because these stocks belong to mature companies, which are less susceptible to large swings in the market, while simultaneously offer outsized payouts or sizable yields on a regular basis irrespective of the market direction.
Dividend growth reflects 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 stocks quality and promising investments for the long term. Further, a history of strong dividend growth indicates that hike is likely in the future.
Though these stocks have a long history of outperformance compared with the broader stock market or any other dividend paying stock, it does not necessarily mean that they have the highest yields.
As a result, picking dividend growth stocks appear as winning strategies 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 appreciated more than the S&P 500 over the past one 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.
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.
Here are five of the 28 stocks that fit the bill:
H&R Block Inc. (HRB - Free Report) : This Missouri-based H&R Block is a diversified company involved in tax return preparation, electronic filing of income tax returns and other tax-related services. The company has seen strong earnings estimate revision of 23 cents over the past 90 days for this fiscal year and delivered an average positive earnings surprise of 8.95% in three of the past four quarters. It has a VGM Style Score of A and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Lazard Ltd. (LAZ - Free Report) : This Bermuda-based company is a preeminent international financial advisory and asset management firm that has long specialized in crafting solutions to the complex financial and strategic challenges of their clients. The company has seen solid earnings estimate revision of 15 cents over the past 90 days for this year and has an expected earnings growth rate of 11.25%. It has a Zacks Rank #2 and a VGM Style Score of A.
Westlake Chemical Corporation (WLK - Free Report) : This Texas-based company is a vertically integrated international manufacturer and supplier of petrochemicals, polymers and fabricated products. It has seen solid earnings estimate revision of 32 cents for this year over the past three months, with an expected earnings growth rate of 16.28%. The stock has a Zacks Rank #2 and a VGM Style Score of B.
Aetna Inc. : This Connecticut-based company is one of the nation's largest health benefits companies and nation's largest insurance and financial services organizations. The stock has seen positive earnings estimate revision of 16 cents over the past 90 days for this year with an expected earnings growth rate of 9.28%. The stock 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 3.58% over the past four quarters and has seen solid earnings estimate revision of a couple of cents for this year over the past three months. The stock has a Zacks Rank #2 and a VGM Style 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.
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 »