3 Dividend Stocks to Pick for Solid Growth
Wall Street has staged a strong comeback over the past month due to easing trade tensions. The U.S.-China trade truce and the U.S.-UK deal spread optimism into the stock market. However, uncertainty surrounding Trump and Fed policies continued to linger. In such a scenario, dividend investing seems the best choice as it offers consistent and safe income.Though the strategy does not offer dramatic price appreciation, it is a major source of consistent income for investors in any market. In particular, focusing on the growth level in this strategy leads to higher returns. 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 three dividend growth stocks — Qifu Technology Inc. QFIN, The TJX Companies Inc. TJX and UGI Corporation UGI — that could be compelling picks for investors.
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 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 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 have narrowed down the universe from over 7,700 stocks to just three.Here are three stocks that fit the bill:China-based Qifu Technology is a Credit-Tech platform principally in China that provides a comprehensive suite of technology services to assist financial institutions and consumers and SMEs in the loan lifecycle, ranging from borrower acquisition, preliminary credit assessment, fund matching and post-facilitation services. The stock has an estimated earnings growth rate of 22.4% for this year and delivered an average earnings surprise of 14.46% in the last four quarters. Qifu has a Zacks Rank #1 and a Growth Score of B. You can see the complete list of today's Zacks #1 Rank stocks here.Massachusetts-based TJX Companies is a leading off-price retailer of apparel and home fashions in the United States and worldwide. The company's broad range of assortments at varying prices helps it reach out to a broad range of consumers. TJX has an estimated earnings growth rate of 3.99% for the fiscal year ending January 2026 and delivered an average earnings surprise of 5.47% in the past four quarters. TJX Companies has a Zacks Rank #2 and a Growth Score of A.Pennsylvania-based UGI Corporation is a holding company that distributes, stores, transports and markets energy products and related services through its subsidiaries. It is a domestic and international retail distributor of propane and butane liquefied petroleum gases; a provider of natural gas and electric service via regulated local distribution utilities; a generator of electricity and a regional marketer of energy commodities. The stock saw a positive earnings estimate revision of 3 cents for the fiscal year (ending September 2025) over the past 30 days. UGI Corporation has a Zacks Rank #2 and a Growth Score of B.The Research Wizard is a great place to begin. It's easy to use. Everything is in plain language. And it's very intuitive. Start your Research Wizard trial today. And the next time you read an economic report, open up the Research Wizard, plug your finds in, and see what gems come out.
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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.
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