Dividend Growth Stocks Offer Stability Amid Market Volatility

Stock market volatility has increased as investors face high inflation, triple-digit oil prices, and the 10-year Treasury reaching its highest level since 2007. Market instability is further compounded by warnings of a spending slowdown from artificial intelligence companies.

In response to these conditions, Hartford Funds reports that dividend growth stocks historically provide higher returns with lower volatility than the broader S&P 500. According to data from the firm, dividend growers and initiators have achieved an average annual total return of 10.22%, the highest among dividend policy categories.

To capture these returns, investors are utilizing vehicles such as the iShares Core Dividend Growth ETF (DGRO). This fund tracks the Morningstar U.S. Dividend Growth Index, which screens for companies maintaining at least five consecutive years of dividend growth and positive earnings forecasts.