Yahoo Finance 5 Top Dividend Growth Stocks to Buy Amid Volatility
The year 2022 has been marked by huge volatility and uncertainty as high inflation, the Fed’s policy tightening and Russia’s invasion of Ukraine continue to weigh on investor sentiment. This has raised the appeal of dividend investing. Though the strategy doesn’t offer dramatic price appreciation, it is a major source of consistent income for investors in any type of market.
In fact, 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 — Archer-Daniels-Midland Company ADM, Deere & Company DE, Booz Allen Hamilton Holding Corporation BAH, Agilent Technologies A, and Boyd Gaming Corporation BYD — that could be compelling picks amid volatility.
Inside Dividend Growth Strategy
Stocks that have a strong history of dividend growth belong to mature companies 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 a 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 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 21.
Here are five of the 21 stocks that fit the bill:
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 has an expected earnings growth rate of 44.3% for this year and delivered an average earnings surprise of 26.22%.
Archer-Daniels has a Zacks Rank #1 and a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
Illinois-based Deere & Company 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 a solid earnings estimate revision of 81 cents over the past 30 days for the fiscal year (ending October 2023) and has an estimated earnings growth rate of 17.2%.
Deere & Company carries a Zacks Rank #2 and a Growth Score of A.
Virginia-based Booz Allen Hamilton Holding is engaged in providing management and technology consulting services to the U.S. government in the defense, intelligence and civil markets. The company saw a positive earnings estimate revision of 4 cents over the past 30 days for the fiscal year (ending March 2023) with an estimated earnings growth rate of 6.2%.
Booz Allen has a Zacks Rank #2 and a Growth Score of A.
California-based Agilent Technologies is an original equipment manufacturer of a broad-based portfolio of test and measurement products serving multiple end markets. The stock saw a solid earnings estimate revision of 14 cents over the past 30 days for the fiscal year (ending October 2023) and has an estimated earnings growth rate of 7.7%.
Agilent Technologies has a Zacks Rank #2 and a Growth Score of B.
Las Vegas-based Boyd Gaming is a multi-jurisdictional gaming company. It owns and operates gaming entertainment properties in Nevada, Illinois, Indiana, Iowa, Kansas, Louisiana, Mississippi, Missouri, Ohio and Pennsylvania. The company saw a positive earnings estimate revision of 5 cents over the past 30 days for this year with a substantial expected earnings growth rate of 12.7%.
Boyd Gaming has a Zacks Rank #2 and a Growth Score of A.
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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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Deere & Company (DE) : Free Stock Analysis Report
Agilent Technologies, Inc. (A) : Free Stock Analysis Report
Archer Daniels Midland Company (ADM) : Free Stock Analysis Report
Boyd Gaming Corporation (BYD) : Free Stock Analysis Report
Booz Allen Hamilton Holding Corporation (BAH) : Free Stock Analysis Report
