5 Dividend Growth Stocks to Buy as US Rate Hike Concerns Ease

For risk-averse investors, steady dividend-growth stocks offer a far more prudent balance of consistent income, lower volatility, and reliable long-term returns at this juncture.

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, Amphenol Corp. APH, Cheesecake Factory CAKE 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. Their steadily rising payouts provide a 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 nine.

Here are the five of those nine 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 67.6%. The stock boasts a long-term (three-to-five years) earnings growth rate of 26.40%. It has an annual dividend yield of 0.56%.

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 26.5% and has 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.

Connecticut-based Amphenol designs, manufactures and markets electrical, electronic and fiber optic connectors, interconnect systems, antennas, sensors and sensor-based products, and coaxial, high-speed, fiber optic and specialty cable. The Zacks Consensus Estimate for APH’s 2026 revenues suggests a year-over-year improvement of 53.5%. The stock boasts a long-term earnings growth rate of 24% and has an annual dividend yield of 0.59%.

APH currently sports a Zacks Rank #1 and a Growth Score of B. 

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 has an annual dividend yield of 1.12%.

CAKE currently sports a Zacks Rank #1 and a Growth Score of A. 

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% and has an annual dividend yield of 0.91%.

GRC currently carries a Zacks Rank #2 and a Growth Score of A.   

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

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