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U.S. stocks slipped on Dec. 26 as holiday-driven light volume snapped winning streaks across major indexes.
Dividend-growth stocks like ENS offer defensive income, backed by consistent payouts.
The screen highlights WWD, DCI, ROK, and VRT for positive revenue outlooks and long-term earnings growth.
The U.S. stock market ended slightly lower on Dec. 26, 2025, primarily due to extremely light trading volume after the Christmas holiday, as many institutional investors were already out for the year. This caused reduced market momentum, leading to small dips in major indexes like the S&P 500, Dow, and Nasdaq, snapping short winning streaks noticed at the beginning of the previous week.
Amid the holiday season, when market activity is typically light, equity investors may prefer dividend-growth stocks over high price-growth names. Companies with a consistent history of dividend increases often demonstrate strong financial health, providing a defensive hedge against economic uncertainty.
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 with high yields.
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 strong history of dividend growth suggests an increase ahead.
Although these stocks do not necessarily have the highest yields, they have outperformed for a more extended period than the broader stock market or any other dividend-paying stock.
As a result, selecting dividend-growth stocks appears to be a winning strategy when other key parameters are also taken into account.
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 lower than the industry median indicates that the stock is undervalued within its industry, meaning an investor would pay less for the company’s cash flow.
52-Week Price Change Greater Than S&P 500 (Market Weight): This ensures that the stock has 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.
These few criteria alone narrowed the universe from more than 7,700 stocks to just 10.
Here are five of the 10 stocks that fit the bill:
Colorado-based Woodward is an independent designer, manufacturer, and service provider of energy conversion and control solutions for the aerospace and industrial markets. The Zacks Consensus Estimate for WWD’s fiscal 2026 revenues suggests a year-over-year improvement of 11.1%. The stock boasts a long-term (three-to-five years) earnings growth rate of 15.20% and has an annual dividend yield of 0.36%.
Pennsylvania-based Enersys engages in the manufacturing, marketing and distribution of various industrial batteries. The Zacks Consensus Estimate for ENS’ fiscal 2026 revenues suggests a year-over-year improvement of 4%. The stock boasts a long-term earnings growth rate of 15% and has an annual dividend yield of 0.70%.
ENS currently has a Zacks Rank #2 and a Growth Score of B.
Minnesota-based Donaldson is engaged in the manufacturing and selling of filtration systems and replacement parts across the world. The consensus estimate for DCI’s fiscal 2026 revenues suggests a year-over-year improvement of 3.5%. The stock boasts a long-term earnings growth rate of 10% and has an annual dividend yield of 1.31%.
DCI currently holds a Zacks Rank #2 and has a Growth Score of B.
Wisconsin-based Rockwell Automation provides industrial automation and information solutions worldwide. The consensus estimate for ROK’s fiscal 2026 revenues implies a year-over-year improvement of 5.8%. The stock boasts a long-term earnings growth rate of 12.4% and has an annual dividend yield of 1.38%.
ROK currently carries a Zacks Rank #2 and has a Growth Score of B.
Ohio-based Vertiv Holdings is a leading global provider of critical digital infrastructure and services for data centers, communication networks, and commercial and industrial environments. The Zacks Consensus Estimate for VRT’s 2025 revenues suggests a year-over-year improvement of 27.5%. The stock boasts a long-term earnings growth rate of 30.2% and has an annual dividend yield of 0.15%.
VRT currently holds a Zacks Rank #2 and has a Growth Score of A.
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 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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Buy These 5 Dividend Growth Stocks Amid Holiday-Driven Light Trading Volume
Key Takeaways
The U.S. stock market ended slightly lower on Dec. 26, 2025, primarily due to extremely light trading volume after the Christmas holiday, as many institutional investors were already out for the year. This caused reduced market momentum, leading to small dips in major indexes like the S&P 500, Dow, and Nasdaq, snapping short winning streaks noticed at the beginning of the previous week.
Amid the holiday season, when market activity is typically light, equity investors may prefer dividend-growth stocks over high price-growth names. Companies with a consistent history of dividend increases often demonstrate strong financial health, providing a defensive hedge against economic uncertainty.
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 with high yields.
We have selected five such dividend growth stocks — Woodward Inc. (WWD - Free Report) , Enersys (ENS - Free Report) , Donaldson (DCI - Free Report) , Rockwell Automation (ROK - Free Report) and Vertiv Holdings (VRT - Free Report) — that could be solid choices 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 strong history of dividend growth suggests an increase ahead.
Although these stocks do not necessarily have the highest yields, they have outperformed for a more extended period than the broader stock market or any other dividend-paying stock.
As a result, selecting dividend-growth stocks appears to be a winning strategy when other key parameters are also taken into account.
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 lower than the industry median indicates that the stock is undervalued within its industry, meaning an investor would pay less for the company’s cash flow.
52-Week Price Change Greater Than S&P 500 (Market Weight): This ensures that the stock has 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.
These few criteria alone narrowed the universe from more than 7,700 stocks to just 10.
Here are five of the 10 stocks that fit the bill:
Colorado-based Woodward is an independent designer, manufacturer, and service provider of energy conversion and control solutions for the aerospace and industrial markets. The Zacks Consensus Estimate for WWD’s fiscal 2026 revenues suggests a year-over-year improvement of 11.1%. The stock boasts a long-term (three-to-five years) earnings growth rate of 15.20% and has an annual dividend yield of 0.36%.
WWD currently has a Zacks Rank #2 and a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pennsylvania-based Enersys engages in the manufacturing, marketing and distribution of various industrial batteries. The Zacks Consensus Estimate for ENS’ fiscal 2026 revenues suggests a year-over-year improvement of 4%. The stock boasts a long-term earnings growth rate of 15% and has an annual dividend yield of 0.70%.
ENS currently has a Zacks Rank #2 and a Growth Score of B.
Minnesota-based Donaldson is engaged in the manufacturing and selling of filtration systems and replacement parts across the world. The consensus estimate for DCI’s fiscal 2026 revenues suggests a year-over-year improvement of 3.5%. The stock boasts a long-term earnings growth rate of 10% and has an annual dividend yield of 1.31%.
DCI currently holds a Zacks Rank #2 and has a Growth Score of B.
Wisconsin-based Rockwell Automation provides industrial automation and information solutions worldwide. The consensus estimate for ROK’s fiscal 2026 revenues implies a year-over-year improvement of 5.8%. The stock boasts a long-term earnings growth rate of 12.4% and has an annual dividend yield of 1.38%.
ROK currently carries a Zacks Rank #2 and has a Growth Score of B.
Ohio-based Vertiv Holdings is a leading global provider of critical digital infrastructure and services for data centers, communication networks, and commercial and industrial environments. The Zacks Consensus Estimate for VRT’s 2025 revenues suggests a year-over-year improvement of 27.5%. The stock boasts a long-term earnings growth rate of 30.2% and has an annual dividend yield of 0.15%.
VRT currently holds a Zacks Rank #2 and has a Growth Score of A.
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 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.