5 Top-Ranked Dividend Growth Stocks for Your Portfolio
Robert Half (RHI), Deere (DE), HP (HPQ), Jones Lang LaSalle (JLL) and Goldman (GS) are excellent picks for investors looking for dividend growth in their portfolio.
Dividend is a major source of consistent income for investors in any type of market though it does not offer dramatic price appreciation. While there are several dividend stocks that could provide capital appreciation, zeroing in on those with a history of dividend growth should lead to a healthy portfolio, with greater scope for capital appreciation as opposed to simple dividend-paying stocks or those with high yields.
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 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 hike 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.
Just these few criteria narrowed down the universe from over 7,700 stocks to just 16.
Here are five of the 16 stocks that fit the bill:
California-based Robert Half International Inc. RHI is one of the world's largest providers of professional consulting and staffing services. The company has seen solid earnings estimate revision of 27 cents over the past seven days for this year and has an estimated earnings growth rate of 95.9%. The stock has a Zacks Rank #1 and Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Illinois-based Deere & Company DE is the world’s largest producer of agricultural equipment, manufacturing agricultural machinery since 1837 under the iconic John Deere brand with its signature green and yellow color scheme. The stock saw positive earnings estimate revision of a penny over the past 30 days for the fiscal year (ending October 2022) and has an estimated earnings growth rate of 17.4%. It carries a Zacks Rank #2 and has a Growth Score of A.
California-based HP Inc. HPQ is a leading global provider of personal computing and other access devices, imaging and printing products, and related technologies, solutions and services to individual consumers, SMBs and large enterprises, including customers in the government, health and education sectors. The stock saw solid earnings estimate revision of 22 cents over the past seven days for fiscal year (ending October 2021) and has an estimated earnings growth rate of 7.8%. The stock sports a Zacks Rank #1 and Growth Score of B.
Chicago-based Jones Lang LaSalle Inc. JLL is a leading full-service real estate firm that provides corporate, financial and investment management services to corporations and other real estate owners, users and investors worldwide. The company saw positive earnings estimate revision by four cents over the past seven days for this year with an expected earnings growth rate of 62.9%. The stock has a Zacks Rank #2 and Growth Score of A.
New York-based The Goldman Sachs Group Inc. GS is a leading global financial holding company providing investment banking, securities and investment management services to a diversified client base. The stock saw solid earnings estimate revision of $7.41 over the past 30 days for this year and has an estimated earnings growth rate of 143%. It carries a Zacks Rank #2 and has a Growth Score of B.
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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.
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The Goldman Sachs Group, Inc. (GS): Free Stock Analysis Report
HP Inc. (HPQ): Free Stock Analysis Report
Deere & Company (DE): Free Stock Analysis Report
Jones Lang LaSalle Incorporated (JLL): Free Stock Analysis Report
Robert Half International Inc. (RHI): Free Stock Analysis Report
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