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Dividend investing has been gaining immense popularity amid low rates and super-easy monetary policy. While there are several dividend stocks that investors could bet on, zeroing in on companies that not only offer dividends but also consistently increase their payouts seems like a good idea at present.
This is because stocks that have a strong history of dividend growth as opposed to those that offer high yields form a healthy portfolio with more scope for capital appreciation.
Peeping Into the 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 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.
Furthermore, these have a long history of outperformance than the broader stock market or any other dividend-paying stock over the long term. However, it does not necessarily mean that they have the highest yields.
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 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 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 15.
Here are five of the 15 stocks that fit the bill:
Florida-based Superior Uniform Group Inc. (SGC - Free Report) manufactures and sells apparel and accessories in the United States and internationally. It has seen solid earnings estimate revision of $1.07 over the past 30 days for this year and has an expected earnings growth rate of 130.4%. The stock has a Zacks Rank #1 and Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Massachusetts-based Thermo Fisher Scientific Inc. (TMO - Free Report) is a scientific instrument maker and world leader in serving science. It has seen positive earnings estimate revision of 23 cents for this year over the past month and has an expected earnings growth rate of 23%. The stock has a Zacks Rank #2 and Growth Score of B.
Ohio-based The Kroger Co. (KR - Free Report) operates as a retailer in the United States. The company operates supermarkets, multi-department stores, marketplace stores and price impact warehouse stores. It has delivered an average four-quarter earnings surprise of 4% and has an expected earnings growth rate of 29.1%. Kroger has a Zacks Rank #2 and Growth Score of A.
Nebraska-based Werner Enterprises Inc. (WERN - Free Report) is a transportation and logistics company primarily focused on transporting the truckload shipments such as retail store merchandise, consumer products, grocery products and manufactured products. The company has seen upward earnings estimate revision of 21 cents over the past 30 days for this year and delivered an average four-quarter earnings surprise of 19%. The stock has a Zacks Rank #2 and Growth Score of A.
California-based Activision Blizzard Inc. is a leading developer and publisher of console, online and mobile games. The stock saw positive earnings estimate revision of 38 cents over the past 30 days for this year and has estimated earnings growth of 40.9%. It 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.
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5 Solid Dividend Growth Stocks to Buy Now
Dividend investing has been gaining immense popularity amid low rates and super-easy monetary policy. While there are several dividend stocks that investors could bet on, zeroing in on companies that not only offer dividends but also consistently increase their payouts seems like a good idea at present.
This is because stocks that have a strong history of dividend growth as opposed to those that offer high yields form a healthy portfolio with more scope for capital appreciation.
Peeping Into the 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 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.
Furthermore, these have a long history of outperformance than the broader stock market or any other dividend-paying stock over the long term. However, it does not necessarily mean that they have the highest yields.
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 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 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 15.
Here are five of the 15 stocks that fit the bill:
Florida-based Superior Uniform Group Inc. (SGC - Free Report) manufactures and sells apparel and accessories in the United States and internationally. It has seen solid earnings estimate revision of $1.07 over the past 30 days for this year and has an expected earnings growth rate of 130.4%. The stock has a Zacks Rank #1 and Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Massachusetts-based Thermo Fisher Scientific Inc. (TMO - Free Report) is a scientific instrument maker and world leader in serving science. It has seen positive earnings estimate revision of 23 cents for this year over the past month and has an expected earnings growth rate of 23%. The stock has a Zacks Rank #2 and Growth Score of B.
Ohio-based The Kroger Co. (KR - Free Report) operates as a retailer in the United States. The company operates supermarkets, multi-department stores, marketplace stores and price impact warehouse stores. It has delivered an average four-quarter earnings surprise of 4% and has an expected earnings growth rate of 29.1%. Kroger has a Zacks Rank #2 and Growth Score of A.
Nebraska-based Werner Enterprises Inc. (WERN - Free Report) is a transportation and logistics company primarily focused on transporting the truckload shipments such as retail store merchandise, consumer products, grocery products and manufactured products. The company has seen upward earnings estimate revision of 21 cents over the past 30 days for this year and delivered an average four-quarter earnings surprise of 19%. The stock has a Zacks Rank #2 and Growth Score of A.
California-based Activision Blizzard Inc. is a leading developer and publisher of console, online and mobile games. The stock saw positive earnings estimate revision of 38 cents over the past 30 days for this year and has estimated earnings growth of 40.9%. It 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.