5 Solid Dividend Growth Stocks to Buy Now

Core Viewpoint - Wall Street is experiencing a historic rally, but concerns over high valuations, geopolitical tensions, and uncertainty regarding Federal Reserve rate cuts are leading investors to favor dividend investing as a more stable strategy [1]. Dividend Investing Strategy - Dividend investing provides consistent income and appeals to a wide range of investors, especially during market uncertainty, as it can reduce portfolio volatility and tends to outperform in choppy markets [2]. - Focusing on dividend growth stocks can lead to higher returns compared to simply investing in high-yield dividend stocks [3]. Characteristics of Dividend Growth Stocks - Stocks with a strong history of year-over-year dividend growth are associated with mature companies that are less volatile and provide downside protection during economic or political uncertainty [4]. - These stocks typically exhibit superior fundamentals, including sustainable business models, profitability, rising cash flows, good liquidity, and strong balance sheets, indicating potential for future dividend increases [5]. Selection Criteria for Dividend Growth Stocks - The selection process includes criteria such as: - 5-Year Historical Dividend Growth greater than zero [6]. - 5-Year Historical Sales Growth greater than zero [7]. - 5-Year Historical EPS Growth greater than zero and expected EPS growth rate greater than zero for the next 3-5 years [8]. - Price/Cash Flow ratio less than the industry average, indicating undervaluation [8]. - 52-Week Price Change greater than the S&P 500 [9]. - Top Zacks Rank (1 or 2) and a Growth Score of B or better for optimal upside potential [9]. Selected Dividend Growth Stocks - Five recommended dividend growth stocks include: - InterDigital, Inc. (IDCC): Estimated earnings growth rate of 64.9% with a Zacks Rank 1 and Growth Score of B [11]. - ResMed Inc. (RMD): Expected earnings growth rate of 20.98% with a Zacks Rank 2 and Growth Score of B [12]. - Greenbrier Companies Inc. (GBX): Estimated growth rate of 4.8% with a Zacks Rank 1 and Growth Score of A [13]. - Charles River Associates (CRAI): Expected earnings growth rate of 30.9% with a Zacks Rank 2 and Growth Score of A [14]. - Kontoor Brands (KTB): Projected earnings growth of 13.1% with a Zacks Rank 2 and Growth Score of B [15].