For Immediate Release
Chicago, IL – May 19, 2016 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Tyson Foods Inc. (TSN - Free Report) , Royal Caribbean Cruises Ltd. (RCL - Free Report) , Aetna Inc. , Lear Corp. (LEA - Free Report) and Total System Services Inc. .
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Here are highlights from Wednesday’s Analyst Blog:
5 Dividend Growth Stocks for Safe and Steady Income
Focusing in on dividend stocks has been a safe and smart play during market turbulence. 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 pays high yields form a healthy portfolio with more scope for capital appreciation.
Why is Dividend Growth Better?
Stocks with a steady dividend growth ensure steady returns and act as hedge against any market downturn and economic or political turmoil. This is especially true as these stocks belong to mature companies, which are less volatile to the large swings in the market.
These stocks often have a sustainable business model, a long track of profitability, rising cash flows, good liquidity, strong balance sheet and some value characteristics. All these superior fundamentals make dividend growth a quality and promising investment for the long term. However, the long history of outperformance for dividend growth stocks compared to the broad stock market or any other dividend paying stocks 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 the stocks with a solid dividend growth history.
Most Recent Payout Ratio less than M-Industry: This is the measure of dividend payments as a percentage of earnings. A relatively low payout ratio indicates the company’s ability to increase dividend in the future even in tough times.
5-Year Historical Sales Growth greater than zero: This represents the stocks with a strong record of growing revenue.
5-Year Historical EPS Growth greater than zero: This represents the 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 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 their peers in any type 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 five of the nine stocks that fit the bill:
Tyson Foods Inc. (TSN)
Royal Caribbean Cruises Ltd. (RCL)
Aetna Inc. (AET)
Lear Corp. (LEA)
Total System Services Inc. (TSS)
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Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.
Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.
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