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5 Dividend Growth Stocks for Safe Income Amid Volatility
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Dividend investing has been in vogue amid bouts of volatility and uncertainty triggered by the ongoing conflict in Ukraine and its inflationary effect on prices. This is especially true as these are major sources of consistent income for investors in any type of market though they do not offer dramatic price appreciation.
In fact, 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 that have high yields. We have selected five dividend growth stocks — The Kroger Co. (KR - Free Report) , NVIDIA Corporation (NVDA - Free Report) , Jones Lang LaSalle Inc. (JLL - Free Report) , Paychex Inc (PAYX - Free Report) and McKesson Corporation (MCK - Free Report) — that could be compelling picks amid market volatility.
Dividend Growth: A Winning 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 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 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 17.
Here are the five of the 17 stocks that fit the bill:
Ohio-based The Kroger operates as a retailer in the United States. The company operates a combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. The stock saw a positive earnings estimate revision of 21 cents for fiscal year (ending January 2023) and has an expected earnings growth rate of 2.4%.
California-based NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. The stock has an expected earnings growth rate of 25% for the fiscal year (ending January 2023) and delivered a four-quarter average earnings surprise of 7.04%.
NVIDIA has a Zacks Rank #2 and a Growth Score of B.
Chicago-based Jones Lang is a leading full-service real estate firm that provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. Jones Lang has seen positive earnings estimate revision by 27 cents over the past month for this year with an expected modest earnings growth rate of 0.05%.
Jones Lang has a Zacks Rank #1 and Growth Score of A.
New York-based Paychex is one of the leading providers of integrated human capital management solutions for payroll, human resource, retirement, and insurance services for small- to medium-sized businesses. The stock saw a solid earnings estimate revision of 11 cents for the fiscal year (ending May 2022) over the past 30 days and has an expected earnings growth rate of 23.36%.
Paychex has a Zacks Rank #2 and a Growth Score of B.
California-based McKesson is a health care services and information technology company. The stock has an expected earnings growth rate of 39% for the fiscal year (ending March 2022) and delivered a four-quarter average earnings surprise of 20.6%.
McKesson 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 Dividend Growth Stocks for Safe Income Amid Volatility
Dividend investing has been in vogue amid bouts of volatility and uncertainty triggered by the ongoing conflict in Ukraine and its inflationary effect on prices. This is especially true as these are major sources of consistent income for investors in any type of market though they do not offer dramatic price appreciation.
In fact, 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 that have high yields. We have selected five dividend growth stocks — The Kroger Co. (KR - Free Report) , NVIDIA Corporation (NVDA - Free Report) , Jones Lang LaSalle Inc. (JLL - Free Report) , Paychex Inc (PAYX - Free Report) and McKesson Corporation (MCK - Free Report) — that could be compelling picks amid market volatility.
Dividend Growth: A Winning 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 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 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 17.
Here are the five of the 17 stocks that fit the bill:
Ohio-based The Kroger operates as a retailer in the United States. The company operates a combination food and drug stores, multi-department stores, marketplace stores, and price impact warehouses. The stock saw a positive earnings estimate revision of 21 cents for fiscal year (ending January 2023) and has an expected earnings growth rate of 2.4%.
Kroger has a Zacks Rank #1 and Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
California-based NVIDIA is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. The stock has an expected earnings growth rate of 25% for the fiscal year (ending January 2023) and delivered a four-quarter average earnings surprise of 7.04%.
NVIDIA has a Zacks Rank #2 and a Growth Score of B.
Chicago-based Jones Lang is a leading full-service real estate firm that provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. Jones Lang has seen positive earnings estimate revision by 27 cents over the past month for this year with an expected modest earnings growth rate of 0.05%.
Jones Lang has a Zacks Rank #1 and Growth Score of A.
New York-based Paychex is one of the leading providers of integrated human capital management solutions for payroll, human resource, retirement, and insurance services for small- to medium-sized businesses. The stock saw a solid earnings estimate revision of 11 cents for the fiscal year (ending May 2022) over the past 30 days and has an expected earnings growth rate of 23.36%.
Paychex has a Zacks Rank #2 and a Growth Score of B.
California-based McKesson is a health care services and information technology company. The stock has an expected earnings growth rate of 39% for the fiscal year (ending March 2022) and delivered a four-quarter average earnings surprise of 20.6%.
McKesson 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.