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Amid heightened volatility and uncertainty, investors are seeking consistent and safe income, thereby driving the appeal for dividend investing. This is especially true as dividends are the major sources of consistent income for investors in any type of market though they do not offer dramatic price appreciation.

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 that have high yields. We have selected five dividend growth stocks — J.B. Hunt Transport Services (JBHT), Archer-Daniels-Midland Company (ADM), NVIDIA Corporation (NVDA), Tractor Supply Company (TSCO) and AmerisourceBergen Corporation (ABC) — that could be compelling picks amid market volatility.

Moreover, a history of dividend growth year over year leads to a healthy portfolio with a greater scope of capital appreciation than simple dividend-paying stocks or those with high yields. 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 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 23.

Here are the five of the 23 stocks that fit the bill:

Arkansas-based J.B. Hunt Transport is a provider of a broad range of transportation services to a diverse group of customers through the United States, Canada and Mexico. JBHT saw a positive earnings estimate revision of 4 cents over the past 30 days for this year and has an expected earnings growth rate of 20.4%.

J.B. Hunt 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.

Illinois-based Archer-Daniels is one of the leading producers of food and beverage ingredients as well as goods made from various agricultural products. ADM saw a solid earnings estimate revision of a penny for this year and delivered a four-quarter average earnings surprise of 21.89%.

Archer-Daniels has a Zacks Rank #1 and a Growth Score of A.

California-based NVIDIA Corporation is the worldwide leader in visual computing technologies and the inventor of the graphic processing unit. The stock saw a solid earnings estimate revision of 40 cents for the fiscal year (ending Jan 2023) over the past 30 days and has an expected earnings growth rate of 25.2%.

NVIDIA has a Zacks Rank #1 and a Growth Score of B.

Tennessee-based Tractor Supply is the largest retail farm and ranch store chain in the United States. The company focuses on recreational farmers and ranchers as well as tradesmen and small businesses. Tractor Supply has an estimated earnings growth of 10.2% for this year and delivered an average earnings surprise of 22.01% in the past four quarters.

Tractor Supply has a Zacks Rank #2 and Growth Score of A.

Pennsylvania-based AmerisourceBergen is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce healthcare costs and improve patient outcomes. It has seen a solid earnings estimate revision of 9 cents for the fiscal year (ending September 2022) over the past month and has an estimated earnings growth rate of 16.5%.

AmerisourceBergen has a Zacks Rank #2 and a Growth Score of A.

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 dividend increase is likely in the future.