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Wall Street has been caught in a vicious circle of woes, led by recent tariff escalations and a slowdown in the economy. The U.S. stocks erased all the gains made post-election, and the S&P 500 is now at its lowest level since November when Trump won the Presidential election.
Amid such conditions, investors are in search of safe and consistent income, and dividend investing seems to be 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 with high yields. We have selected five dividend growth stocks — Taiwan Semiconductor Manufacturing Company Ltd. TSM, Tapestry, Inc. TPR, ABM Industries ABM, Vertiv Holdings Co. VRT and ResMed Inc. RMD — which could be solid choices amid market volatility.
Why 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.
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. 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 revenue growth.
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 a stock is undervalued in that industry, and an investor needs to pay less for better cash flow generated by a company.
52-Week Price Change Greater Than S&P 500 (Market Weight): This ensures that a stock has 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 every 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.
These few criteria narrowed down the universe from more than 7,700 stocks to just 11.
Here are five of the 11 stocks that fit the bill:
Taiwan-based Taiwan Semiconductor is the world's largest dedicated integrated circuit foundry. The company has seen a positive earnings estimate revision of a penny over the past 30 days for this year and has an estimated earnings growth rate of 30.7%.
TSM currently has a Zacks Rank #2 and a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
New York-based Tapestry, which was formerly known as Coach, is the designer and marketer of fine accessories and gifts for women and men in the United States and internationally. The stock saw a solid earnings estimate revision of 28 cents over the past 30 days for the fiscal year (ending June 2025) and has an estimated earnings growth rate of 14.4%.
Tapestry has a Zacks Rank #2 and a Growth Score of A at present.
New York-based ABM Industries is a provider of integrated facility solutions in the United States and internationally. The company’s offerings include janitorial, energy, facilities engineering, electrical and lighting, landscape and turf, HVAC and mechanical, and mission-critical and parking solutions. ABM Industries has an estimated earnings growth rate of 3.9% for the fiscal year (ending October 2025) and delivered an average earnings surprise of 11.56% for the past four quarters.
ABM Industries currently has a Zacks Rank #2 and a Growth Score of B.
Ohio-based Vertiv Holdings provides digital infrastructure and continuity solutions. It offers hardware, software, analytics and ongoing services. The company saw a positive earnings estimate revision of a penny over the past month for this year and has an estimated earnings growth rate of 25.9%.
Vertiv Holdings has a Zacks Rank #2 and a Growth Score of A at present.
California-based ResMed holds a major position as a designer, manufacturer and distributor of generators, masks and related accessories for the treatment of sleep-disordered breathing and other respiratory disorders worldwide. The stock saw a positive earnings estimate revision of 4 cents over the past 30 days for the fiscal year (ending June 2025) and has an expected earnings growth rate of 22.7%.
ResMed currently has a Zacks Rank #2 and a Growth Score of B.
You can get the rest of the stocks on this list by signing up now for your 2-week free trial to the Research Wizard and start using this screen in your own trading. Further, you can also create your own strategies and test them first before taking the investment plunge.