5 Dividend Growth Stocks to Boost Your Portfolio

Dividend investing continues to be popular. 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 potential, appealing to a broad range of investors, from those seeking steady income to those aiming for long-term capital appreciation. Additionally, it can provide a sense of security in times of market uncertainty or downturns.

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 — AGCO Corporation AGCO, Vertiv Holdings Co. VRT, TE Connectivity TEL, Cardinal Health Inc. CAH and Woodward Inc. WWD — that could be solid choices for your portfolio.

Why Dividend Growth 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 to be 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 have narrowed down the universe from over 7,700 stocks to just 10.

Here are five of the 10 stocks that fit the bill:

Georgia-based AGCO Corporation is a leading manufacturer and distributor of agricultural equipment and related replacement parts.  The stock saw a solid earnings estimate revision of 43 cents over the past 30 days for this year, but its earnings are expected to decline 37.3% year over year.

AGCO Corporation 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.

Ohio-based Vertiv Holdings is a leading global provider of critical digital infrastructure and services for data centers, communication networks, and commercial and industrial environments. Vertiv serves essential industries, including cloud computing, financial services, healthcare, transportation, manufacturing, energy, government, education, retail and social media. The company saw a positive earnings estimate revision of 26 cents over the past month for this year and has an estimated earnings growth rate of 34%. 

Vertiv Holdings has a Zacks Rank #1 and a Growth Score of A at present. 

Ireland-based TE Connectivity is a global technology company that designs and manufactures connectivity and sensor solutions for a wide range of industries, including automotive, aerospace, defense, energy and medical. The company saw a solid earnings estimate revision of 35 cents over the past 30 days for the fiscal year (ending September 2025), with estimated growth of 13.76%.

TE Connectivity sports a Zacks Rank #1 and has a Growth Score of B. 

Ohio-based Cardinal Health is a global healthcare services and products distributor to hospitals, healthcare providers, pharmacies and manufacturers. The company saw a positive earnings estimate revision of 16 cents over the past 30 days for the fiscal year (ending June 2026), with an expected earnings growth rate of 13.71%. 

Cardinal Health presently has a Zacks Rank #2 and a Growth Score of A.

Colorado-based Woodward is an independent designer, manufacturer and service provider of energy control and optimization solutions for the aerospace and industrial markets. The stock saw a positive earnings estimate revision of 15 cents over the past 30 days for the fiscal year (ending September 2025). It has an expected earnings growth rate of 5.24%.

Woodward has a Zacks Rank #2 and a Growth Score of B.

You can get the remaining 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.

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.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

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This article originally published on Zacks Investment Research (zacks.com).

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