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5 Dividend Growth Stocks to Buy for a Safe Portfolio
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Uncertainty surrounding the timing of rate cuts has been playing foul on the stock market this year. Against such a backdrop, investors are increasingly exploring strategies that will help them to protect their portfolios from downside risk. Nothing seems better than the strategy of dividend investing.
Picking stocks with a history of dividend growth leads to a healthy portfolio with a greater scope of capital appreciation as opposed to simple dividend-paying stocks or those with high yields. We have selected five dividend growth stocks — Installed Building Products Inc. (IBP - Free Report) , PACCAR Inc. (PCAR - Free Report) , McKesson Corporation (MCK - Free Report) , Republic Services Inc. (RSG - Free Report) and PulteGroup Inc. (PHM - Free Report) — that could be solid choices amid market volatility.
A Look at 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 a 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 nine.
Here are five of the nine stocks that fit the bill:
Ohio-based Installed Building Products operates as a residential insulation installer in the United States. The company also installs complementary building products, including garage doors, rain gutters, shower doors, closet shelving and mirrors. Installed Building Products has an estimated earnings growth rate of 13% for this year and delivered an average earnings surprise of 7.27% in the past four quarters.
Washington-based PACCAR is a leading manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks. The company saw solid earnings estimate revision of 51 cents over the past month for this year and delivered an average earnings surprise of 17.07% for the past four quarters.
PACCAR has a Zacks Rank #1 and a Growth Score of B.
California-based McKesson is a healthcare services and information technology company. The company saw a positive earnings estimate revision of a couple of cents over the past month for the fiscal year (ending March 2024) and has an expected earnings growth rate of 5.1%
McKesson has a Zacks Rank #2 and a Growth Score of B.
Arizona-based Republic Services is the second largest provider of non-hazardous solid waste collection, transfer, disposal, recycling, and energy services in the United States. It saw a positive earnings estimate revision of a penny over the past month for this year and has an estimated earnings growth rate of 8.7%.
Republic Services has a Zacks Rank #2 and a Growth Score of B.
Atlanta-based PulteGroup is engaged in homebuilding and financial services businesses, primarily in the United States. The company saw a solid earnings estimate revision of 55 cents over the past month for this year and has an estimated earnings growth rate of 1.7%.
PulteGroup carries a Zacks Rank #2 and has 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 Dividend Growth Stocks to Buy for a Safe Portfolio
Uncertainty surrounding the timing of rate cuts has been playing foul on the stock market this year. Against such a backdrop, investors are increasingly exploring strategies that will help them to protect their portfolios from downside risk. Nothing seems better than the strategy of dividend investing.
Picking stocks with a history of dividend growth leads to a healthy portfolio with a greater scope of capital appreciation as opposed to simple dividend-paying stocks or those with high yields. We have selected five dividend growth stocks — Installed Building Products Inc. (IBP - Free Report) , PACCAR Inc. (PCAR - Free Report) , McKesson Corporation (MCK - Free Report) , Republic Services Inc. (RSG - Free Report) and PulteGroup Inc. (PHM - Free Report) — that could be solid choices amid market volatility.
A Look at 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 a 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 nine.
Here are five of the nine stocks that fit the bill:
Ohio-based Installed Building Products operates as a residential insulation installer in the United States. The company also installs complementary building products, including garage doors, rain gutters, shower doors, closet shelving and mirrors. Installed Building Products has an estimated earnings growth rate of 13% for this year and delivered an average earnings surprise of 7.27% in the past four quarters.
Installed Building Products sports a Zacks Rank #1 and a Growth Score of A at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Washington-based PACCAR is a leading manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks. The company saw solid earnings estimate revision of 51 cents over the past month for this year and delivered an average earnings surprise of 17.07% for the past four quarters.
PACCAR has a Zacks Rank #1 and a Growth Score of B.
California-based McKesson is a healthcare services and information technology company. The company saw a positive earnings estimate revision of a couple of cents over the past month for the fiscal year (ending March 2024) and has an expected earnings growth rate of 5.1%
McKesson has a Zacks Rank #2 and a Growth Score of B.
Arizona-based Republic Services is the second largest provider of non-hazardous solid waste collection, transfer, disposal, recycling, and energy services in the United States. It saw a positive earnings estimate revision of a penny over the past month for this year and has an estimated earnings growth rate of 8.7%.
Republic Services has a Zacks Rank #2 and a Growth Score of B.
Atlanta-based PulteGroup is engaged in homebuilding and financial services businesses, primarily in the United States. The company saw a solid earnings estimate revision of 55 cents over the past month for this year and has an estimated earnings growth rate of 1.7%.
PulteGroup carries a Zacks Rank #2 and has 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..