Market volatility increased once again as the Trump administration slapped a 25% tariff on goods from Mexico and Canada and a 10% tariff on goods from China, reigniting fears of a trade war with the nation's closest trading partners. Also, DeepSeek, a China-based artificial intelligence startup, threatened the future of American tech supremacy.
Amid such conditions, investors are in search of safe and consistent income and dividend investing seems a good strategy. Dividends are major sources of consistent income for investors. However, they do not offer dramatic price appreciation. These stocks tend to outperform in a choppy market and can reduce the volatility of a portfolio.
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 — InterDigital, Inc. IDCC, Taiwan Semiconductor Manufacturing Company Ltd. TSM, Acuity Brands Inc AYI, Greenbrier Companies Inc. GBX and Fox Corporation FOX — that could be solid choices amid market volatility.
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 11.
Here are five of the 11 stocks that fit the bill:
Delaware-based InterDigital is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular and wireless 3G, 4G and IEEE 802-related products and networks. Estimates for IDCC’s earnings for this year have risen by a couple of cents over the past 30 days.
InterDigital currently sports a Zacks Rank #1 and has a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Taiwan-based Taiwan Semiconductor is the world's largest dedicated integrated circuit foundry. The company has seen a solid earnings estimate revision of 27 cents over the past 30 days for this year and has an estimated earnings growth rate of 29.5%.
TSM has a Zacks Rank #2 and a Growth Score of B.
Georgia-based Acuity Brands manufactures and distributes lighting fixtures and related components that comprise devices such as luminaries, lighting controls and controllers for various building systems, power supplies, prismatic skylights, and drivers, as well as integrated systems designed to optimize energy efficiency and comfort for various indoor and outdoor applications.
The company saw a solid earnings estimate revision of 5 cents over the past seven days for the fiscal year (ending August 2025) and has an estimated growth rate of 8.93%. Acuity Brands has a Zacks Rank #2 and a Growth Score of A.
Oregon-based Greenbrier is a leading supplier of transportation equipment and services to the railroad and related industries. The company saw a solid earnings estimate revision of 70 cents for the fiscal year (ending August 2025) over the past 30 days and has an estimated growth rate of 18.95%.
Greenbrier has a Zacks Rank #1 and a Growth Score of A at present.
New York-based Fox Corporation produces and distributes news, sports and entertainment content. The company's brands include FOX News, FOX Sports, the FOX Network, the FOX Television Stations and sports cable networks FS1, FS2, Fox Deportes and Big Ten Network. The company delivered an average earnings surprise of 17.64% in the past four quarters and has an expected earnings growth rate of 13.99% for the fiscal year (ending June 2025).
Fox Corporation has a Zacks Rank #2 and a Growth Score of A.
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Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.
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InterDigital, Inc. (IDCC) : Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM) : Free Stock Analysis Report
Greenbrier Companies, Inc. (The) (GBX) : Free Stock Analysis Report
Fox Corporation (FOX) : Free Stock Analysis Report
Acuity Brands Inc (AYI) : Free Stock Analysis Report
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