Chicago, IL – February 23, 2024 – Stocks in this week’s article are Griffon Corp. GFF, ArcBest Corp. ARCB, Ralph Lauren Corp. RL, KB Home KBH and PACCAR Inc. PCAR.
5 Dividend Stocks with Strong Growth Prospects to Buy
Dividend investing remains a popular choice among investors, irrespective of market conditions. This strategy focuses on companies that not only pay dividends but also consistently increase them over time. This approach offers a unique blend of income and growth, appealing to a broad range of investors. Additionally, it can provide a sense of security in times of market uncertainty or downturns, as dividend-paying stocks can reduce the volatility of a portfolio and tend to outperform in a choppy market.
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 — Griffon Corp., ArcBest Corp., Ralph Lauren Corp., KB Home and PACCAR Inc. — that could be solid choices for your portfolio.
Dividend Growth: A Winning Strategy
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.
Here are five of the 13 stocks that fit the bill:
New York-based Griffon is a diversified management and holding company conducting business through wholly-owned subsidiaries. The company saw a positive earnings estimate revision of a couple of cents over the past seven days for the fiscal year ending September 2024 and delivered an average earnings surprise of 30.38% for the past four quarters.
Griffon 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.
Arkansas-based ArcBest provides freight transportation services and solutions. The company has seen a positive earnings estimate revision of 13 cents over the past 30 days for this year and has an estimated earnings growth rate of 30.2%.
ArcBest has a Zacks Rank #2 and a Growth Score of A.
New York-based Ralph Lauren is a major designer, marketer and distributor of premium lifestyle products in North America, Europe, Asia and internationally. It offers products in apparel, footwear, accessories, home furnishings, and other licensed product categories. The company saw a solid earnings estimate revision of 65 cents over the past month for the fiscal year (ending March 2024) and has an expected earnings growth rate of 21.2%
Ralph Lauren has a Zacks Rank #1 and a Growth Score of A.
California-based KB Home is a well-known homebuilder in the United States and one of the largest in the state. The company saw a solid earnings estimate revision of 7 cents over the past 30 days for the fiscal year ending November 2024 and has an estimated earnings growth rate of 7.97%.
KB Home has a Zacks Rank #2 and a Growth Score of A.
Washington-based PACCAR is a leading manufacturer of heavy-duty trucks in the world and has substantial manufacturing exposure to light/medium trucks. The company saw a solid earnings estimate revision of 36 cents over the past month for this year and delivered an average earnings surprise of 17.07% for the past four quarters.
PACCAR carries a Zacks Rank #1 and has a Growth Score of B.
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