Buy These 5 Dividend Growth Stocks Amid Heavy Tech Sell-Offs

Market Overview - Major U.S. stock indices experienced a significant decline on December 12, 2025, primarily driven by sell-offs in technology stocks due to concerns over an AI bubble narrative [1] - Investors reacted negatively to news from Broadcom, which indicated expected margin pressure in its AI business for the first quarter of fiscal 2026, despite exceeding fiscal fourth-quarter earnings estimates [1] Investment Strategy - In the current market environment, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a history of raising dividends typically demonstrate strong financial health, providing a defensive hedge against economic uncertainty [2] - Stocks with a strong history of year-over-year dividend growth are suggested to form a healthier portfolio with greater potential for capital appreciation compared to simple dividend-paying stocks or those with high yields [2] Selected Dividend Growth Stocks - Five dividend growth stocks have been identified as potential solid choices for investment: TE Connectivity (TEL), Enersys (ENS), Donaldson (DCI), Lam Research (LRCX), and Leidos Holdings (LDOS) [3][9] - These stocks exhibit positive sales and earnings per share (EPS) growth histories, consistent dividend increases, solid fundamentals, and favorable valuation metrics [9] Characteristics of Dividend Growth Stocks - Stocks with a strong history of dividend growth are typically associated with mature companies that are less vulnerable to market volatility, thus providing a hedge against economic or political uncertainties [4] - These stocks are characterized by superior fundamentals, including sustainable business models, long-term profitability, rising cash flows, good liquidity, strong balance sheets, and value characteristics [5] - Although these stocks may not have the highest yields, they have historically outperformed the broader stock market and other dividend-paying stocks [6] Performance Metrics - Selected stocks must meet specific criteria, including: - 5-Year Historical Dividend Growth Greater Than Zero - 5-Year Historical Sales Growth Greater Than Zero - 5-Year Historical EPS Growth Greater Than Zero - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Additional metrics include a Price/Cash Flow ratio less than the industry median and a 52-Week Price Change greater than the S&P 500 [8] Individual Stock Insights - TE Connectivity (TEL): Expected fiscal 2026 revenue growth of 10.2%, long-term earnings growth rate of 12.3%, and an annual dividend yield of 1.23% [10][11] - Enersys (ENS): Projected fiscal 2026 revenue growth of 4%, long-term earnings growth rate of 15%, and an annual dividend yield of 0.71% [11][12] - Donaldson (DCI): Anticipated fiscal 2026 revenue growth of 3.4%, long-term earnings growth rate of 10%, and an annual dividend yield of 1.30% [12] - Lam Research (LRCX): Expected fiscal 2026 revenue growth of 14.1%, long-term earnings growth rate of 20.3%, and an annual dividend yield of 0.65% [13] - Leidos Holdings (LDOS): Projected fiscal 2025 revenue growth of 3.4%, long-term earnings growth rate of 11.6%, and an annual dividend yield of 0.84% [14]