Wall Street ended the last trading session on a positive note, as investors reacted to strong earnings results amid falling oil prices. However, this optimism may prove short-lived, given the fragile ceasefire between the United States and Iran, with fresh attacks reported in the Strait of Hormuz.
Against this backdrop, risk-averse investors may find that steady dividend-growth stocks offer a more balanced mix of income and stability than high-beta growth plays at this stage.
These dividend-growth stocks boast a consistent track record of raising payouts, underscoring the balance sheet strength and cash flow resilience required to navigate a period when the traditional growth narrative is being reassessed.
Stocks with a strong history of year-over-year dividend growth can help build a resilient portfolio with greater potential for capital appreciation compared to simple dividend-paying or high-yield stocks.
We have selected five dividend growth stocks — Cummins Inc. CMI, Broadcom AVGO, Analog Devices ADI, Ultrapar Participacoes UGP and GormanRupp GRC — that could be solid choices for your portfolio.
Why Is Dividend Growth Better?
Stocks with a strong history of dividend growth are typically associated with mature companies that are less prone to sharp market swings, allowing them to serve as a hedge against economic or political uncertainty, as well as broader market volatility. At the same time, their steadily rising payouts provide a measure of downside protection.
These companies are generally backed by solid fundamentals, making them appealing long-term dividend-growth investments. Key strengths include durable business models, consistent profitability, expanding cash flows, healthy liquidity, strong balance sheets and attractive valuations.
A consistent history of dividend growth underscores the potential for continued growth ahead.
Although these stocks do not necessarily have the highest yields, they have outperformed the broader stock market or any other dividend-paying stock for an extended period.
As a result, selecting dividend-growth stocks appears to be a winning strategy when other key parameters are taken into account.
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 lower than the industry median indicates that a stock is undervalued within its industry, meaning an investor would pay less for the company’s cash flow.
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 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.
These few criteria alone narrowed the universe from more than 7,700 stocks to just six.
Here are five of the six stocks that fit the bill:
Indiana-based Cummins is a designer, manufacturer, and distributor of diesel and natural gas engines and powertrain-related component products like fuel systems, turbochargers, transmissions, batteries, and electrified power systems. The Zacks Consensus Estimate for CMI’s 2026 revenues suggests a year-over-year improvement of 5.6%. The stock boasts a long-term (three-to-five years) earnings growth rate of 12.10%. It has an annual dividend yield of 1.22%.
CMI currently carries a Zacks Rank #2 and has a Growth Score of A. You can see the complete list of today’s Zacks #1 Rank stocks here.
California-based Broadcom is a premier designer, developer and global supplier of a broad range of semiconductor devices with a focus on complex digital and mixed signal complementary metal oxide semiconductor (CMOS) based devices and analog III-V based products. The Zacks Consensus Estimate for AVGO’s fiscal 2026 revenues suggests a year-over-year improvement of 60.4%. The stock boasts a long-term earnings growth rate of 48.60%. It has an annual dividend yield of 0.62%.
AVGO currently holds a Zacks Rank #2 and a Growth Score of B.
Massachusetts-based Analog Devices is an original equipment manufacturer of semiconductor devices, specifically, analog, mixed signal, and digital signal processing (DSP) integrated circuits. The Zacks Consensus Estimate for ADI’s fiscal 2026 revenues suggests a year-over-year improvement of 26.3%. The stock boasts a long-term earnings growth rate of 21.90%. It has an annual dividend yield of 1.11%.
ADI currently has a Zacks Rank #2 and a Growth Score of B.
Brazil-based Ultrapar Participacoes is one of the largest distributors of liquefied petroleum gas in Brazil and a leading producer of petrochemicals and chemicals. The Zacks Consensus Estimate for UGP’s 2026 revenues suggests a year-over-year improvement of 47.8%. The stock boasts a long-term earnings growth rate of 9.30% and has an annual dividend yield of 3.49%.
UGP currently carries a Zacks Rank #2 and a Growth Score of B.
Ohio-based GormanRupp designs, manufactures and sells pumps and related equipment (pump and motor controls) for use in water, wastewater, construction, industrial, petroleum, original equipment, agricultural, fire protection, military and other liquid-handling applications. The Zacks Consensus Estimate for GRC’s 2026 revenues suggests a year-over-year improvement of 6.5%. The stock boasts a long-term earnings growth rate of 13%. It has an annual dividend yield of 1.00%.
GRC currently sports a Zacks Rank #1 and a Growth Score of B.
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Analog Devices, Inc. (ADI): Free Stock Analysis Report
Cummins Inc. (CMI): Free Stock Analysis Report
Broadcom Inc. (AVGO): Free Stock Analysis Report
Gorman-Rupp Company (The) (GRC): Free Stock Analysis Report
Ultrapar Participacoes S.A. (UGP): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).