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5 Top Dividend Stocks That Promise Substantial Growth
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Wall Street has been on a solid run this year, driven by strong earnings, AI craze and rate-cut optimism. However, escalation in Middle East tensions, presidential election uncertainty and global slowdown concerns continued to weigh on it. In such a scenario, dividend investing seems the best choice as it offers consistent and safe income.
Though the strategy does not offer dramatic price appreciation, it is a major source of consistent income for investors in any market. In particular, focusing on the growth level in this strategy leads to higher returns. 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 with high yields.
We have selected five dividend growth stocks — Leidos Holdings Inc. (LDOS - Free Report) , NetApp (NTAP - Free Report) , ResMed Inc. (RMD - Free Report) , Trane Technologies (TT - Free Report) and The Travelers Companies (TRV - Free Report) — that could be compelling picks for investors.
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 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) or 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 11.
Here are five of the 11 stocks that fit the bill:
Delaware-based Leidos Holdings is a global science and technology leader that serves the defense, intelligence, civil and health markets. It has an estimated earnings growth rate of 22.7% for this year and delivered an average earnings surprise of 23.49% in the last four quarters.
California-based NetApp provides enterprise storage as well as data management software and hardware products and services. The stock has an estimated earnings growth rate of 9.6% for the fiscal year (ending April 2025) and delivered an average earnings surprise of 8.63% in the last four quarters.
NetApp currently has a Zacks Rank #2 and a Growth Score of A.
California-based ResMed holds a major position as a designer, manufacturer, as well as a distributor of generators, masks and related accessories for the treatment of sleep-disordered breathing and other respiratory disorders worldwide. The stock saw a negative earnings estimate revision of a penny over the past seven days for the fiscal year (ending June 2025) and has an estimated earnings growth rate of 17.6%.
ResMed has a Zacks Rank #2 and a Growth Score of B.
Ireland-based Trane Technologies is a designer, manufacturer, seller and servicer of climate control products for heating, ventilation, air conditioning and transport solutions. The stock saw a positive earnings estimate revision of a couple of cents over the past 30 days for this year, with the expected earnings growth rate being 20.5%.
Trane Technologies has a Zacks Rank #2 and a Growth Score of B.
New York-based Travelers is principally engaged, through its subsidiaries, in providing a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States and select international markets. The stock saw a solid earnings estimate revision of $1.10 over the past seven days for this year and has an estimated earnings growth rate of 38.9%.
Travelers 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 Stocks That Promise Substantial Growth
Wall Street has been on a solid run this year, driven by strong earnings, AI craze and rate-cut optimism. However, escalation in Middle East tensions, presidential election uncertainty and global slowdown concerns continued to weigh on it. In such a scenario, dividend investing seems the best choice as it offers consistent and safe income.
Though the strategy does not offer dramatic price appreciation, it is a major source of consistent income for investors in any market. In particular, focusing on the growth level in this strategy leads to higher returns. 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 with high yields.
We have selected five dividend growth stocks — Leidos Holdings Inc. (LDOS - Free Report) , NetApp (NTAP - Free Report) , ResMed Inc. (RMD - Free Report) , Trane Technologies (TT - Free Report) and The Travelers Companies (TRV - Free Report) — that could be compelling picks for investors.
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 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) or 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 11.
Here are five of the 11 stocks that fit the bill:
Delaware-based Leidos Holdings is a global science and technology leader that serves the defense, intelligence, civil and health markets. It has an estimated earnings growth rate of 22.7% for this year and delivered an average earnings surprise of 23.49% in the last four quarters.
Leidos Holdings has a Zacks Rank #1 and a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
California-based NetApp provides enterprise storage as well as data management software and hardware products and services. The stock has an estimated earnings growth rate of 9.6% for the fiscal year (ending April 2025) and delivered an average earnings surprise of 8.63% in the last four quarters.
NetApp currently has a Zacks Rank #2 and a Growth Score of A.
California-based ResMed holds a major position as a designer, manufacturer, as well as a distributor of generators, masks and related accessories for the treatment of sleep-disordered breathing and other respiratory disorders worldwide. The stock saw a negative earnings estimate revision of a penny over the past seven days for the fiscal year (ending June 2025) and has an estimated earnings growth rate of 17.6%.
ResMed has a Zacks Rank #2 and a Growth Score of B.
Ireland-based Trane Technologies is a designer, manufacturer, seller and servicer of climate control products for heating, ventilation, air conditioning and transport solutions. The stock saw a positive earnings estimate revision of a couple of cents over the past 30 days for this year, with the expected earnings growth rate being 20.5%.
Trane Technologies has a Zacks Rank #2 and a Growth Score of B.
New York-based Travelers is principally engaged, through its subsidiaries, in providing a wide variety of property and casualty insurance and surety products and services to businesses, organizations and individuals in the United States and select international markets. The stock saw a solid earnings estimate revision of $1.10 over the past seven days for this year and has an estimated earnings growth rate of 38.9%.
Travelers 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.