We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
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.
Grab 4 Solid Dividend Growth Stocks at a Bargain Price
Read MoreHide Full Article
Dividend investing has been in vogue amid market volatility and near-zero interest rates. This is because dividend-paying securities are a major source of consistent income for investors to create wealth when returns from the equity market are at risk.
Additionally, investors’ drive for income has raised demand for dividend stocks. In particular, the Fed has turned super dovish and hinted at no rate hikes through 2022.
While there are several dividend stocks that could provide capital appreciation, honing in on 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.
Why Dividend Growth Investing Is 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 history of strong dividend growth indicates that 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.
P/E Ratio Less than X-Industry: A ratio less than X-industry indicates that the stock is cheap and undervalued in that industry.
Just these few criteria narrowed down the universe from over 7,700 stocks to just six.
Here are the four of the six stocks that fit the bill:
Ohio-based Big Lots Inc. (BIG - Free Report) along with its fully-owned subsidiaries is a broad-line closeout retailer in the United States. The stock is expected to see earnings growth of 21% for fiscal year (ending January 2021) and has a P/E ratio of 7.55 versus the industry average of 23.59. It has a Zacks Rank #1 and Growth Score of A. You can seethe complete list of today’s Zacks #1 Rank stocks here.
Tennessee-based Dollar General Corporation (DG - Free Report) is a discount retailer providing various merchandise products across the United States. The company has a P/E ratio of 22.53 compared with the industry average of 23.59 and an expected earnings growth rate of 21.4% for fiscal year (ending January 2021). It has a Zacks Rank #2 and Growth Score of A.
Ohio-based The Kroger Co. (KR - Free Report) operates as a retailer in the United States. The company operates supermarkets, multi-department stores, marketplace stores and price-impact warehouse stores. The company has a P/E ratio of 13.08 compared with the industry average of 14.02 and an expected earnings growth rate of 12.3% for fiscal year (ending January 2021). Kroger has a Zacks Rank #2 and Growth Score of A.
New York-based-based Bristol-Myers Squibb Company (BMY - Free Report) is one of the leading global specialty biopharmaceutical companies focused on the development of treatments targeting serious diseases. Its earnings are expected to grow 30.9% for this year while its P/E ratio stands at 9.15 compared with the industry average of 14.77. The stock carries 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 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.
Image: Shutterstock
Grab 4 Solid Dividend Growth Stocks at a Bargain Price
Dividend investing has been in vogue amid market volatility and near-zero interest rates. This is because dividend-paying securities are a major source of consistent income for investors to create wealth when returns from the equity market are at risk.
Additionally, investors’ drive for income has raised demand for dividend stocks. In particular, the Fed has turned super dovish and hinted at no rate hikes through 2022.
While there are several dividend stocks that could provide capital appreciation, honing in on 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.
Why Dividend Growth Investing Is 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 history of strong dividend growth indicates that 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.
P/E Ratio Less than X-Industry: A ratio less than X-industry indicates that the stock is cheap and undervalued in that industry.
Just these few criteria narrowed down the universe from over 7,700 stocks to just six.
Here are the four of the six stocks that fit the bill:
Ohio-based Big Lots Inc. (BIG - Free Report) along with its fully-owned subsidiaries is a broad-line closeout retailer in the United States. The stock is expected to see earnings growth of 21% for fiscal year (ending January 2021) and has a P/E ratio of 7.55 versus the industry average of 23.59. It has a Zacks Rank #1 and Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Tennessee-based Dollar General Corporation (DG - Free Report) is a discount retailer providing various merchandise products across the United States. The company has a P/E ratio of 22.53 compared with the industry average of 23.59 and an expected earnings growth rate of 21.4% for fiscal year (ending January 2021). It has a Zacks Rank #2 and Growth Score of A.
Ohio-based The Kroger Co. (KR - Free Report) operates as a retailer in the United States. The company operates supermarkets, multi-department stores, marketplace stores and price-impact warehouse stores. The company has a P/E ratio of 13.08 compared with the industry average of 14.02 and an expected earnings growth rate of 12.3% for fiscal year (ending January 2021). Kroger has a Zacks Rank #2 and Growth Score of A.
New York-based-based Bristol-Myers Squibb Company (BMY - Free Report) is one of the leading global specialty biopharmaceutical companies focused on the development of treatments targeting serious diseases. Its earnings are expected to grow 30.9% for this year while its P/E ratio stands at 9.15 compared with the industry average of 14.77. The stock carries 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 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.