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5 Top Dividend Growth Stocks for Assured Returns in 2023
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Dividend investing remains a popular strategy. Though the strategy doesn’t offer dramatic price appreciation, it is a major source of consistent income for investors in any type of market. In particular, focusing on the growth level in this strategy leads to higher returns.
Honing in on stocks with a history of dividend growth leads to a healthy portfolio, with greater scope of capital appreciation, as opposed to simple dividend-paying stocks or those with high yields. We have selected five dividend growth stocks — Nexstar Broadcasting Group (NXST - Free Report) , Walmart Inc. (WMT - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) , Agilent Technologies (A - Free Report) , and Agnico Eagle Mines Limited (AEM - Free Report) — that could be compelling picks for your portfolio.
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 19.
Here are five of the 19 stocks that fit the bill:
Texas-based Nexstar Broadcasting currently owns, operates, programs or provides sales and other services to television stations in the states of Illinois, Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania, Louisiana, Arkansas, Alabama and New York. The company delivered an average earnings surprise of 26.33% for the past four quarters.
Arkansas-based Walmart has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. It is engaged in the operation of retail, wholesale and other units worldwide. The company has an estimated earnings growth rate of 7.7% for the fiscal year (ending January 2024) and delivered an average earnings surprise of 3.83% for the past four quarters.
Presently, WMT has a Zacks Rank #2 and a Growth Score of B.
Virginia-based Booz Allen is engaged in providing management and technology consulting services to the U.S. government in the defense, intelligence and civil markets. BAH saw an estimated earnings growth rate of 6.2% for the fiscal year (ending March 2023) and delivered an average earnings surprise of 8.75% for the past four quarters.
Currently, Booz Allen has a Zacks Rank #1 and a Growth Score of A.
California-based Agilent Technologies is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets. The company has an estimated earnings growth rate of 8% for the fiscal year (ending October 2023) and delivered an average earnings surprise of 6.74% for the past four quarters.
Currently, A has a Zacks Rank #2 and a Growth Score of B.
Canada-based Agnico Eagle is a gold producer with mining operations in Canada, Mexico and Finland, and exploration activities in Canada, Europe, Latin America and the United States. The company delivered an average earnings surprise of 26.40% for the past four quarters.
AEM currently 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.
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5 Top Dividend Growth Stocks for Assured Returns in 2023
Dividend investing remains a popular strategy. Though the strategy doesn’t offer dramatic price appreciation, it is a major source of consistent income for investors in any type of market. In particular, focusing on the growth level in this strategy leads to higher returns.
Honing in on stocks with a history of dividend growth leads to a healthy portfolio, with greater scope of capital appreciation, as opposed to simple dividend-paying stocks or those with high yields. We have selected five dividend growth stocks — Nexstar Broadcasting Group (NXST - Free Report) , Walmart Inc. (WMT - Free Report) , Booz Allen Hamilton Holding Corporation (BAH - Free Report) , Agilent Technologies (A - Free Report) , and Agnico Eagle Mines Limited (AEM - Free Report) — that could be compelling picks for your portfolio.
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 19.
Here are five of the 19 stocks that fit the bill:
Texas-based Nexstar Broadcasting currently owns, operates, programs or provides sales and other services to television stations in the states of Illinois, Indiana, Maryland, Missouri, Montana, Texas, Pennsylvania, Louisiana, Arkansas, Alabama and New York. The company delivered an average earnings surprise of 26.33% for the past four quarters.
At present, NXST has a Zacks Rank #1 and a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arkansas-based Walmart has evolved from just being a traditional brick-and-mortar retailer into an omnichannel player. It is engaged in the operation of retail, wholesale and other units worldwide. The company has an estimated earnings growth rate of 7.7% for the fiscal year (ending January 2024) and delivered an average earnings surprise of 3.83% for the past four quarters.
Presently, WMT has a Zacks Rank #2 and a Growth Score of B.
Virginia-based Booz Allen is engaged in providing management and technology consulting services to the U.S. government in the defense, intelligence and civil markets. BAH saw an estimated earnings growth rate of 6.2% for the fiscal year (ending March 2023) and delivered an average earnings surprise of 8.75% for the past four quarters.
Currently, Booz Allen has a Zacks Rank #1 and a Growth Score of A.
California-based Agilent Technologies is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets. The company has an estimated earnings growth rate of 8% for the fiscal year (ending October 2023) and delivered an average earnings surprise of 6.74% for the past four quarters.
Currently, A has a Zacks Rank #2 and a Growth Score of B.
Canada-based Agnico Eagle is a gold producer with mining operations in Canada, Mexico and Finland, and exploration activities in Canada, Europe, Latin America and the United States. The company delivered an average earnings surprise of 26.40% for the past four quarters.
AEM currently 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.