Market Overview - The U.S. stock market experienced a slight decline on December 26, 2025, primarily due to low trading volume following the Christmas holiday, with many institutional investors absent for the year [1] - Major indexes such as the S&P 500, Dow, and Nasdaq saw small dips, ending short winning streaks observed earlier in the week [1][9] Investment Strategy - During the holiday season, equity investors may favor dividend-growth stocks over high price-growth stocks, as companies with a consistent history of dividend increases often exhibit strong financial health [2] - Dividend-growth stocks provide a defensive hedge against economic uncertainty and market volatility, making them attractive during periods of low market activity [4] Dividend Growth Stocks - Stocks with a strong history of year-over-year dividend growth are considered healthier investments, offering greater potential for capital appreciation compared to simple dividend-paying stocks [3][6] - Five selected dividend-growth stocks include: - Woodward Inc. (WWD): Expected revenue growth of 11.1% for fiscal 2026, long-term earnings growth rate of 15.20%, and an annual dividend yield of 0.36% [10] - Enersys (ENS): Projected revenue growth of 4% for fiscal 2026, long-term earnings growth rate of 15%, and an annual dividend yield of 0.70% [11] - Donaldson (DCI): Anticipated revenue growth of 3.5% for fiscal 2026, long-term earnings growth rate of 10%, and an annual dividend yield of 1.31% [12] - Rockwell Automation (ROK): Expected revenue growth of 5.8% for fiscal 2026, long-term earnings growth rate of 12.4%, and an annual dividend yield of 1.38% [13] - Vertiv Holdings (VRT): Projected revenue growth of 27.5% for fiscal 2025, long-term earnings growth rate of 30.2%, and an annual dividend yield of 0.15% [14] Stock Selection Criteria - Stocks selected for their strong fundamentals include criteria such as: - 5-Year Historical Dividend Growth Greater Than Zero [6] - 5-Year Historical Sales Growth Greater Than Zero [7] - 5-Year Historical EPS Growth Greater Than Zero [7] - Next 3-5 Year EPS Growth Rate Greater Than Zero [7] - Price/Cash Flow Less Than Industry Median [8] - 52-Week Price Change Greater Than S&P 500 [8]

Core Insights - Donaldson Company, Inc. (DCI) is experiencing growth across all segments, with acquired assets expected to enhance performance in upcoming quarters [1][3] - DCI holds a Zacks Rank 2 (Buy) and has outperformed the industry with a 9.9% gain over the past year, while the industry declined by 6.8% [1][6] Business Strength - The Mobile Solutions segment is benefiting from increased aftermarket business volume and recovery in agriculture markets [3][6] - The Industrial Solutions segment is supported by demand for dust collection equipment in the U.S. and Europe, as well as growth in the aerospace and defense sectors [4][6] - The Life Sciences segment is boosted by rising demand for disk drives and food & beverage products in the Asia Pacific region [4] Expansion Efforts - DCI has focused on acquisitions for business expansion, including a 49% stake in Medica S.p.A. in August 2024, enhancing its filtration technology and market reach [5][6] - The acquisition of Univercells Technologies in June 2023 further strengthens DCI's position in the life sciences industry [5][6] Rewards to Shareholders - DCI is committed to returning value to shareholders, having paid $333.6 million in dividends and repurchased $162.7 million in shares in fiscal 2025 [6][7] - The company increased its quarterly dividend by 11.1% in May 2025 and has raised dividends for 29 consecutive years [7] Northbound Estimate Revision - The Zacks Consensus Estimate for DCI's fiscal 2026 and fiscal 2027 earnings has been revised upward by 3.1% and 2.1%, respectively, in the past 60 days [7]