Wall Street closed on a mixed note on Aug. 24, 2026, highlighting a sharp sector divergence.
The S&P 500 and Nasdaq were dragged down by heavy sell-offs in tech stocks ahead of NVIDIA’s NVDA highly anticipated fiscal second-quarter earnings report. However, the Dow Jones Industrial Average managed to inch higher as investors rotated out of high-valuation growth names and into defensive blue-chip stocks.
With persistent pressure from elevated bond yields and sticky inflation lingering in the background, this market shift underscores a growing preference for stability.
Amid this backdrop, steady dividend-growth stocks offer a prudent balance of consistent income, lower volatility, and reliable long-term returns compared to their high-growth counterparts.
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 in which 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 — Dell Technologies DELL, Taiwan Semiconductor TSM, Enersys Inc. ENS, Cheesecake Factory CAKE and Hewlett Packard HPE — 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. Their steadily rising payouts provide some measure of downside protection.
These companies are generally backed by solid fundamentals, making them attractive 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 with a Zacks Rank #1 (Strong Buy) or 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 five.
Here are the five stocks that fit the bill:
Texas-based Dell Technologies is a leading provider of servers, storage and personal computers. The company’s IT solutions support customers in traditional infrastructure and multi-cloud environments. The Zacks Consensus Estimate for DELL’s fiscal 2027 revenues suggests a year-over-year improvement of 54.6%. The stock boasts a long-term (three-to-five years) earnings growth rate of 26.40%. It has an annual dividend yield of 0.57%.
DELL currently carries a Zacks Rank #2 and has a Growth Score of A.
Headquartered in Taiwan, Taiwan Semiconductor is the world's largest dedicated integrated circuit (IC) foundry. The Zacks Consensus Estimate for TSM’s 2026 revenues suggests a year-over-year improvement of 35.7%. The stock boasts a long-term earnings growth rate of 26.50% and an annual dividend yield of 0.71%.
TSM currently sports a Zacks Rank #1 and a Growth Score of B. You can see the complete list of today’s Zacks #1 Rank stocks here.
Pennsylvania-based EnerSys manufactures, markets, and distributes industrial batteries and related stored-energy products. It also develops battery chargers and accessories, power electronics, power equipment and outdoor cabinet enclosures. The Zacks Consensus Estimate for ENS’ fiscal 2027 revenues suggests a year-over-year improvement of 3.7%. The stock boasts a long-term earnings growth rate of 15% and has an annual dividend yield of 0.55%.
ENS currently sports a Zacks Rank #1 and a Growth Score of A.
Headquartered in California, Cheesecake Factory is a restaurant and bakery company that owns and operates hundreds of upscale, full-service dining locations. The Zacks Consensus Estimate for CAKE’s 2026 revenues suggests a year-over-year improvement of 6.8%. The stock boasts a long-term earnings growth rate of 12.50% and an annual dividend yield of 1.06%.
CAKE currently holds a Zacks Rank #2 and a Growth Score of B.
California-based Hewlett Packard is a leader in essential enterprise technology. The Zacks Consensus Estimate for HPE’s fiscal 2026 revenues suggests a 31.7% year-over-year improvement. The stock boasts a long-term earnings growth rate of 32% and has an annual dividend yield of 1.07%.
HPE currently carries a Zacks Rank #2 and a Growth Score of A.
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Dell Technologies Inc. (DELL): Free Stock Analysis Report
The Cheesecake Factory Incorporated (CAKE): Free Stock Analysis Report
Taiwan Semiconductor Manufacturing Company Ltd. (TSM): Free Stock Analysis Report
Enersys (ENS): Free Stock Analysis Report
Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report
NVIDIA Corporation (NVDA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).