5 Stocks for Solid Dividend Growth

In volatile markets, investors look for both growth and income in their portfolios. This can be achieved by honing in on companies that not only pay dividends but have been consistently increasing their payout.  

Why Dividend Growth?

Stocks that have a history of enhancing shareholder returns through consistent dividend hikes make an investor’s portfolio immune to large swings in stock prices in turbulent times. Simultaneously, these offer outsized payouts or sizable yields on a regular basis irrespective of the market direction.

Although these stocks do not necessarily have the highest yields, they are proven outperformers over the long term.

For finding stocks with a solid dividend growth history, we have added 5-Year Historical Dividend Growth of more than zero to our screening. A solid history hints at their consistency in dividend growth in the future as well. In order to find stocks that have growth features too, we have added some growth metrics to our screening.

We have also added some other criteria to make the strategy extremely gainful.  

Other Parameters

Next 3–5 Year EPS Growth Rate Over 10%: This represents the rate at which the company’s earnings are expected to grow.

Growth Style Score of B or better: This further evaluates the company’s growth prospects through the analysis of its income statement, balance sheet and cash flow statement. Stocks with a Growth Score of A or B are deemed the strongest and are expected to yield the highest return.

Zacks Rank Less than 3: Stocks having a Zacks Rank #1 (Strong Buy), 2 (Buy) and 3 (Hold) generally perform better than their peers in all types of market environment.

Market Capitalization greater than $2.5 billion: The higher the market capitalization, the more liquid the stock is.  

Return on Equity greater than S&P 500 (Median): A high ROE means the company is spending wisely and is in all likelihood profitable.

Price/Cash Flow less than S&P 500 (Median): A ratio less than that of the S&P 500 indicates that the stock is undervalued relative to the index, as an investor needs to pay less for a better cash flow generated by the company.

52-Week Price Change greater than S&P 500 (Median): This ensures that the stock appreciated more than the S&P 500 over the past one year.

Here are the five of the nine stocks that qualified the screening:

Alaska Air Group (ALK - Analyst Report)

Target Corp. (TGT - Analyst Report)

Huntington Ingalls Industries Inc. (HII - Analyst Report)

Hill-Rom Holdings Inc. (HRC - Analyst Report)

Broadcom Limited (AVGO - Analyst Report)

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.