We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
3 Dividend Growth Stocks to Buy as Fed Expected to Keep Rates Higher
Read MoreHide Full Article
Key Takeaways
Dividend growth stocks can offer steady income, lower volatility, and long-term return potential.
Rising payouts can reflect strong fundamentals, resilient cash flows and solid balance sheets.
Stocks like ENS show positive revenue and earnings growth alongside rising dividend payouts.
Major U.S. stock market indices ended last week on a dismal note as a strong August employment report increased expectations of a prolonged tight monetary policy. Meanwhile, tech stocks delivered mixed performance. Select chipmakers gained while software and enterprise firms faced pullbacks.
With the market consensus indicating that the Federal Reserve is likely to keep interest rates higher for longer, investors may hesitate to add pure growth-oriented stocks to their portfolios.
Instead, steady dividend-paying stocks present an attractive alternative.
Notably, dividend-growth stocks offer a prudent balance of consistent income, lower volatility, and reliable long-term returns compared to their high-growth counterparts.
These companies boast a proven track record of increasing payouts, underscoring the balance-sheet strength and cash-flow resilience required to navigate a market environment where traditional growth narratives are being reassessed.
Stocks with a strong history of year-over-year dividend growth can help build a resilient portfolio with greater potential for capital appreciation compared to simple dividend-paying or high-yield stocks.
We have selected three dividend growth stocks — Enersys Inc. (ENS - Free Report) , Cheesecake Factory (CAKE - Free Report) and Victory Capital Holdings (VCTR - Free Report) — that could be solid choices for your portfolio.
Why Is Dividend Growth Better?
Stocks with a strong history of dividend growth are typically associated with mature companies that are less prone to sharp market swings, allowing them to serve as a hedge against economic or political uncertainty as well as broader market volatility. Their steadily rising payouts provide some measure of downside protection.
These companies are generally backed by solid fundamentals, making them attractive long-term dividend-growth investments. Key strengths include durable business models, consistent profitability, expanding cash flows, healthy liquidity, strong balance sheets and attractive valuations.
A consistent history of dividend growth underscores the potential for continued growth ahead.
Although these stocks do not necessarily have the highest yields, they have outperformed the broader stock market or any other dividend-paying stock for an extended period.
As a result, selecting dividend-growth stocks appears to be a winning strategy when other key parameters are 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 a 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 a 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 three.
Here are the three stocks that fit the bill:
Pennsylvania-based EnerSys manufactures, markets, and distributes industrial batteries and related stored-energy products. It also develops battery chargers and accessories, power electronics, power equipment, and outdoor cabinet enclosures. The Zacks Consensus Estimate for ENS' fiscal 2027 revenues suggests a year-over-year improvement of 3.7%. The stock boasts a long-term earnings growth rate of 15% and has an annual dividend yield of 0.58%.
ENS currently carries a Zacks Rank #2 and has a Growth Score of A.
Headquartered in California, Cheesecake Factory is a restaurant and bakery company that owns and operates hundreds of upscale, full-service dining locations. The Zacks Consensus Estimate for CAKE's 2026 revenues suggests a year-over-year improvement of 7%. The stock boasts a long-term earnings growth rate of 13.10% and an annual dividend yield of 1.12%.
Headquartered in Texas, Victory Capital Holdings is an integrated multi-boutique asset management firm. The Zacks Consensus Estimate for VCTR’s 2026 revenues suggests a year-over-year improvement of 24.7%. The stock boasts a long-term earnings growth rate of 15.70% and has an annual dividend yield of 1.76%.
VCTR currently holds a Zacks Rank #2 and has a Growth Score of B.
View the Zacks #1 Rank List
Image: Bigstock
3 Dividend Growth Stocks to Buy as Fed Expected to Keep Rates Higher
Key Takeaways
Major U.S. stock market indices ended last week on a dismal note as a strong August employment report increased expectations of a prolonged tight monetary policy. Meanwhile, tech stocks delivered mixed performance. Select chipmakers gained while software and enterprise firms faced pullbacks.
With the market consensus indicating that the Federal Reserve is likely to keep interest rates higher for longer, investors may hesitate to add pure growth-oriented stocks to their portfolios.
Instead, steady dividend-paying stocks present an attractive alternative.
Notably, dividend-growth stocks offer a prudent balance of consistent income, lower volatility, and reliable long-term returns compared to their high-growth counterparts.
These companies boast a proven track record of increasing payouts, underscoring the balance-sheet strength and cash-flow resilience required to navigate a market environment where traditional growth narratives are being reassessed.
Stocks with a strong history of year-over-year dividend growth can help build a resilient portfolio with greater potential for capital appreciation compared to simple dividend-paying or high-yield stocks.
We have selected three dividend growth stocks — Enersys Inc. (ENS - Free Report) , Cheesecake Factory (CAKE - Free Report) and Victory Capital Holdings (VCTR - Free Report) — that could be solid choices for your portfolio.
Why Is Dividend Growth Better?
Stocks with a strong history of dividend growth are typically associated with mature companies that are less prone to sharp market swings, allowing them to serve as a hedge against economic or political uncertainty as well as broader market volatility. Their steadily rising payouts provide some measure of downside protection.
These companies are generally backed by solid fundamentals, making them attractive long-term dividend-growth investments. Key strengths include durable business models, consistent profitability, expanding cash flows, healthy liquidity, strong balance sheets and attractive valuations.
A consistent history of dividend growth underscores the potential for continued growth ahead.
Although these stocks do not necessarily have the highest yields, they have outperformed the broader stock market or any other dividend-paying stock for an extended period.
As a result, selecting dividend-growth stocks appears to be a winning strategy when other key parameters are 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 a 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 a 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 three.
Here are the three stocks that fit the bill:
Pennsylvania-based EnerSys manufactures, markets, and distributes industrial batteries and related stored-energy products. It also develops battery chargers and accessories, power electronics, power equipment, and outdoor cabinet enclosures. The Zacks Consensus Estimate for ENS' fiscal 2027 revenues suggests a year-over-year improvement of 3.7%. The stock boasts a long-term earnings growth rate of 15% and has an annual dividend yield of 0.58%.
ENS currently carries a Zacks Rank #2 and has a Growth Score of A.
Headquartered in California, Cheesecake Factory is a restaurant and bakery company that owns and operates hundreds of upscale, full-service dining locations. The Zacks Consensus Estimate for CAKE's 2026 revenues suggests a year-over-year improvement of 7%. The stock boasts a long-term earnings growth rate of 13.10% and an annual dividend yield of 1.12%.
CAKE currently sports a Zacks Rank #1 and has a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Headquartered in Texas, Victory Capital Holdings is an integrated multi-boutique asset management firm. The Zacks Consensus Estimate for VCTR’s 2026 revenues suggests a year-over-year improvement of 24.7%. The stock boasts a long-term earnings growth rate of 15.70% and has an annual dividend yield of 1.76%.
VCTR currently holds a Zacks Rank #2 and has a Growth Score of B.