10 Best Dividend Growth Stocks Smart Money Is Buying for February 2026
Welcome to the Value Sense Blog, your resource for insights on the stock market! At Value Sense, we focus on intrinsic value tools and offer stock ideas with undervalued companies. Dive into our research products and learn more about our unique approach at valuesense.io
Explore diverse stock ideas covering technology, healthcare, and commodities sectors. Our insights are crafted to help investors spot opportunities in undervalued growth stocks, enhancing potential returns. Visit us to see evaluations and in-depth market research.
Market Overview & Selection Criteria
The stock market continues to show strength in technology and semiconductor sectors amid AI-driven demand, while energy and financials provide stability amid economic shifts. Value Sense selected these 10 best stock picks based on high Quality ratings (primarily 5.4-8.3), robust metrics like ROIC, revenue growth, and free cash flow, alongside comparisons to intrinsic value estimates. This stock watchlist prioritizes companies with strong gross margins and growth potential, filtered for diversification across tech, energy, industrials, autos, and banking. Methodology emphasizes undervalued stocks via ValueSense's intrinsic value tools, focusing on FCF margins above 20% where possible and low debt to equity for select leaders, creating a balanced view of investment opportunities in today's market.
Featured Stock Analysis
Stock #1: NVIDIA Corporation (NVDA)
| Metric | Value |
|---|---|
| Market Cap | $4,676.7B |
| Quality Rating | 8.2 |
| Intrinsic Value | $85.9 |
| 1Y Return | 53.3% |
| Revenue | $187.1B |
| Free Cash Flow | $77.3B |
| Revenue Growth | 65.2% |
| FCF margin | 41.3% |
| Gross margin | 70.1% |
| ROIC | 161.5% |
| Total Debt to Equity | 9.1% |
Investment Thesis
NVIDIA Corporation (NVDA) stands out with a massive Market Cap of $4,676.7B and an impressive Quality rating of 8.2. The company's intrinsic value is estimated at $85.9, supported by explosive revenue of $187.1B and revenue growth of 65.2%. Exceptional Free Cash Flow at $77.3B yields a FCF margin of 41.3%, paired with a stellar gross margin of 70.1% and unmatched ROIC of 161.5%. Total Debt to Equity remains low at 9.1%, signaling financial strength. This positions NVDA as a leader in high-growth tech, particularly AI and semiconductors, with 1Y Return of 53.3% reflecting market recognition.
Key financials highlight NVIDIA's dominance, making it a core holding in any value stock portfolio analysis.
Key Catalysts
- Unparalleled 65.2% revenue growth driven by AI chip demand
- 161.5% ROIC indicating superior capital efficiency
- 77.3B FCF enabling reinvestment and shareholder returns
- 70.1% gross margin supporting sustained profitability
Risk Factors
- High valuation relative to intrinsic value of $85.9 may pressure multiples
- Semiconductor cycle volatility could impact growth
- Low debt to equity but concentration in tech sector
Stock #2: Taiwan Semiconductor Manufacturing Company Limited (TSM)
| Metric | Value |
|---|---|
| Market Cap | $1,730.0B |
| Quality Rating | 8.2 |
| Intrinsic Value | $484.8 |
| 1Y Return | 58.8% |
| Revenue | NT$3,818.9B |
| Free Cash Flow | NT$1,019.8B |
| Revenue Growth | 31.9% |
| FCF margin | 26.7% |
| Gross margin | 59.9% |
| ROIC | 38.2% |
| Total Debt to Equity | 18.2% |
Investment Thesis
Taiwan Semiconductor Manufacturing Company Limited (TSM) boasts a Market Cap of $1,730.0B and Quality rating of 8.2. Its intrinsic value sits at $484.8, backed by revenue of NT$3,818.9B and revenue growth of 31.9%. Strong Free Cash Flow of NT$1,019.8B delivers a FCF margin of 26.7%, with gross margin at 59.9% and ROIC of 38.2%. Total Debt to Equity is manageable at 18.2%, and 1Y Return reached 58.8%. As the world's leading chip foundry, TSM benefits from global semiconductor demand, complementing peers like NVDA in supply chain analysis.
This profile underscores TSM's role in best value stocks for long-term tech exposure.
Key Catalysts
- 31.9% revenue growth from advanced node production
- 38.2% ROIC reflecting manufacturing excellence
- NT$1,019.8B FCF for capacity expansion
- Strategic position in AI and 5G ecosystems
Risk Factors
- Geopolitical tensions in Taiwan region
- Cyclical chip industry fluctuations
- Currency risks with NT$ reporting
Stock #3: Broadcom Inc. (AVGO)
| Metric | Value |
|---|---|
| Market Cap | $1,574.3B |
| Quality Rating | 8.2 |
| Intrinsic Value | $131.5 |
| 1Y Return | 53.6% |
| Revenue | $63.9B |
| Free Cash Flow | $26.9B |
| Revenue Growth | 23.9% |
| FCF margin | 42.1% |
| Gross margin | 67.8% |
| ROIC | 18.3% |
| Total Debt to Equity | 80.1% |
Investment Thesis
Broadcom Inc. (AVGO) features a Market Cap of $1,574.3B and Quality rating of 8.2. Intrinsic value is $131.5, driven by revenue of $63.9B and 23.9% growth. Free Cash Flow of $26.9B yields 42.1% FCF margin, gross margin of 67.8%, and ROIC of 18.3%. Total Debt to Equity at 80.1% is higher but supported by cash flows; 1Y Return was 53.6%. AVGO's focus on semiconductors and infrastructure software positions it well in diversified stock picks.
Key Catalysts
- 42.1% FCF margin for acquisitions and dividends
- 23.9% revenue growth in networking and storage
- High gross margin sustaining profitability
- AI infrastructure tailwinds
Risk Factors
- Elevated 80.1% debt to equity amid interest rates
- Acquisition integration risks
- Competition in chip design
Stock #4: Oracle Corporation (ORCL)
| Metric | Value |
|---|---|
| Market Cap | $474.9B |
| Quality Rating | 6.1 |
| Intrinsic Value | $160.5 |
| 1Y Return | -3.4% |
| Revenue | $61.0B |
| Free Cash Flow | ($13.2B) |
| Revenue Growth | 11.1% |
| FCF margin | (21.6%) |
| Gross margin | 78.0% |
| ROIC | 13.1% |
| Total Debt to Equity | 408.4% |
Investment Thesis
Oracle Corporation (ORCL) has a Market Cap of $474.9B and Quality rating of 6.1. Intrinsic value at $160.5 contrasts with 1Y Return of -3.4%, amid revenue of $61.0B and 11.1% growth. Free Cash Flow is negative at $13.2B with 21.6% FCF margin, but gross margin shines at 78.0% and ROIC at 13.1%. Total Debt to Equity is high at 408.4%. Oracle's cloud transition offers investment opportunities in enterprise software.
Key Catalysts
- 78.0% gross margin from SaaS shift
- 11.1% revenue growth in cloud services
- Strong ROIC despite FCF pressures
Risk Factors
- Negative FCF signaling capex needs
- 408.4% debt vulnerable to rates
- Lagging 1Y Return
Most investors waste time on the wrong metrics. We've spent 10,000+ hours perfecting our value investing engine to find what actually matters.
Want to see what we'll uncover next - before everyone else does?
Find Hidden Gems First!
Stock #5: Chevron Corporation (CVX)
| Metric | Value |
|---|---|
| Market Cap | $347.3B |
| Quality Rating | 5.4 |
| Intrinsic Value | $103.8 |
| 1Y Return | 14.4% |
| Revenue | $187.0B |
| Free Cash Flow | $10.8B |
| Revenue Growth | (5.2%) |
| FCF margin | 5.8% |
| Gross margin | 18.4% |
| ROIC | N/A |
| Total Debt to Equity | 21.9% |
Investment Thesis
Chevron Corporation (CVX) shows Market Cap $347.3B, Quality rating 5.4, intrinsic value $103.8, and 1Y Return 14.4%. Revenue $187.0B with 5.2% growth, FCF $10.8B (5.8% margin), gross margin 18.4%, ROIC N/A, debt to equity 21.9%. Energy sector stability aids diversification in this stock watchlist.
Key Catalysts
- Solid $10.8B FCF for dividends
- Low 21.9% debt balance sheet
- Energy demand resilience
Risk Factors
- Negative revenue growth from oil prices
- Commodity volatility
- N/A ROIC uncertainty
Stock #6: General Electric Company (GE)
| Metric | Value |
|---|---|
| Market Cap | $325.8B |
| Quality Rating | 7.2 |
| Intrinsic Value | $90.5 |
| 1Y Return | 49.5% |
| Revenue | $45.9B |
| Free Cash Flow | $7,264.0M |
| Revenue Growth | 0.2% |
| FCF margin | 15.8% |
| Gross margin | 36.9% |
| ROIC | 20.9% |
| Total Debt to Equity | 108.4% |
Investment Thesis
General Electric Company (GE) has Market Cap $325.8B, Quality rating 7.2, intrinsic value $90.5, 1Y Return 49.5%. Revenue $45.9B (0.2% growth), FCF $7,264.0M (15.8% margin), gross margin 36.9%, ROIC 20.9%, debt 108.4%. Restructuring boosts industrials appeal.
Key Catalysts
- 49.5% 1Y Return momentum
- 20.9% ROIC improvement
- 15.8% FCF margin recovery
Risk Factors
- Stagnant revenue growth
- 108.4% debt load
- Cyclical industrials exposure
Stock #7: Lam Research Corporation (LRCX)
| Metric | Value |
|---|---|
| Market Cap | $305.5B |
| Quality Rating | 8.3 |
| Intrinsic Value | $132.7 |
| 1Y Return | 190.0% |
| Revenue | $20.6B |
| Free Cash Flow | $6,661.6M |
| Revenue Growth | 26.8% |
| FCF margin | 32.4% |
| Gross margin | 49.8% |
| ROIC | 55.2% |
| Total Debt to Equity | 44.2% |
Investment Thesis
Lam Research Corporation (LRCX) features Market Cap $305.5B, Quality rating 8.3, intrinsic value $132.7, 1Y Return 190.0%. Revenue $20.6B (26.8% growth), FCF $6,661.6M (32.4% margin), gross margin 49.8%, ROIC 55.2%, debt 44.2%. Semiconductor equipment leader.
Key Catalysts
- Explosive 190.0% 1Y Return
- 55.2% ROIC excellence
- 26.8% revenue growth
Risk Factors
- Intrinsic value gap
- Wafer fab cycle risks
- Supply chain dependencies
Stock #8: Toyota Motor Corporation (TM)
| Metric | Value |
|---|---|
| Market Cap | $295.1B |
| Quality Rating | 6.5 |
| Intrinsic Value | $565.1 |
| 1Y Return | 18.8% |
| Revenue | ¥49.4T |
| Free Cash Flow | ¥147.8B |
| Revenue Growth | 6.4% |
| FCF margin | 0.3% |
| Gross margin | 18.0% |
| ROIC | 8.8% |
| Total Debt to Equity | 103.7% |
Investment Thesis
Toyota Motor Corporation (TM) with Market Cap $295.1B, Quality rating 6.5, intrinsic value $565.1, 1Y Return 18.8%. Revenue ¥49.4T (6.4% growth), FCF ¥147.8B (0.3% margin), gross margin 18.0%, ROIC 8.8%, debt 103.7%. Auto sector hybrid strength.
Key Catalysts
- High intrinsic value potential
- 6.4% revenue growth
- Global EV/hybrid shift
Risk Factors
- Low 0.3% FCF margin
- 103.7% debt
- Auto industry competition
Stock #9: Royal Bank of Canada (RY)
| Metric | Value |
|---|---|
| Market Cap | $235.3B |
| Quality Rating | 6.3 |
| Intrinsic Value | $140.3 |
| 1Y Return | 38.1% |
| Revenue | CA$137.4B |
| Free Cash Flow | CA$53.0B |
| Revenue Growth | 2.1% |
| FCF margin | 38.6% |
| Gross margin | 45.3% |
| ROIC | 47.7% |
| Total Debt to Equity | 600.0% |
Investment Thesis
Royal Bank of Canada (RY) shows Market Cap $235.3B, Quality rating 6.3, intrinsic value $140.3, 1Y Return 38.1%. Revenue CA$137.4B (2.1% growth), FCF CA$53.0B (38.6% margin), gross margin 45.3%, ROIC 47.7%, debt 600.0%. Banking stability.
Key Catalysts
- 47.7% ROIC efficiency
- 38.6% FCF margin
- 38.1% 1Y Return
Risk Factors
- Extreme 600.0% debt
- Interest rate sensitivity
- Regulatory pressures
Stock #10: Banco Bradesco S.A. (BBDO)
| Metric | Value |
|---|---|
| Market Cap | $227.0B |
| Quality Rating | 5.5 |
| Intrinsic Value | $0.7 |
| 1Y Return | 88.4% |
| Revenue | R$293.7B |
| Free Cash Flow | (R$41.9B) |
| Revenue Growth | 19.4% |
| FCF margin | (14.3%) |
| Gross margin | 29.7% |
| ROIC | 31.0% |
| Total Debt to Equity | 424.4% |
Investment Thesis
Banco Bradesco S.A. (BBDO) has Market Cap $227.0B, Quality rating 5.5, intrinsic value $0.7, 1Y Return 88.4%. Revenue R$293.7B (19.4% growth), FCF R$41.9B (-14.3% margin), gross margin 29.7%, ROIC 31.0%, debt 424.4%. Emerging markets banking play.
Key Catalysts
- 88.4% 1Y Return surge
- 19.4% revenue growth
- 31.0% ROIC
Risk Factors
- Very low intrinsic value
- Negative FCF
- High 424.4% debt and Brazil risks
Portfolio Diversification Insights
These top stocks to buy now offer strong diversification: ~70% in technology/semiconductors (NVDA, TSM, AVGO, LRCX, ORCL) for growth; energy (CVX) and industrials/autos (GE, TM) for cyclicals; financials (RY, BBDO) for income. High-quality tech leaders like NVDA/TSM pair with stable CVX, reducing volatility. Sector allocation balances undervalued stocks in AI/tech (high ROIC) with value in energy/banks (dividends), creating resilient stock watchlist for retail investors.
Market Timing & Entry Strategies
Consider positions during sector dips, such as semiconductor pullbacks post-earnings or energy on oil stabilization. Dollar-cost average into high-quality names like NVDA/TSM for long-term holds, monitoring intrinsic value vs. price. Enter financials (RY, BBDO) on rate cut signals; watch revenue growth and FCF quarterly. Use ValueSense tools for timing based on Quality ratings.
Explore More Investment Opportunities
For investors seeking undervalued companies with high fundamental quality, our analytics team provides curated stock lists:
📌 50 Undervalued Stocks (Best overall value plays for 2025)
📌 50 Undervalued Dividend Stocks (For income-focused investors)
📌 50 Undervalued Growth Stocks (High-growth potential with strong fundamentals)
🔍 Check out these stocks on the Value Sense platform for free!
More Articles You Might Like
- Nelson Peltz - Trian Fund Management Portfolio Q3'2025: Top Holdings & Recent Changes
- Principles for Dealing with the Changing World Order by Ray Dalio
- The Ascent of Money by Niall Ferguson
- Principles for Navigating Big Debt Crises by Ray Dalio
- Influence: The Psychology of Persuasion by Robert B. Cialdini Ph.D.
FAQ Section
How were these stocks selected?
Selected via ValueSense criteria emphasizing Quality ratings 5.4+, strong ROIC, FCF margins, and intrinsic value comparisons for diversified stock picks.
What's the best stock from this list?
LRCX leads with 8.3 Quality rating, 190.0% 1Y Return, and 55.2% ROIC, though all offer unique investment ideas based on sectors.
Should I buy all these stocks or diversify?
Diversify across tech (NVDA, TSM), energy (CVX), and financials (RY) to balance growth and stability in your stock watchlist.
What are the biggest risks with these picks?
High debt in ORCL/RY/BBDO, sector cycles in semis/energy, and intrinsic value gaps; monitor FCF and geopolitics.
When is the best time to invest in these stocks?
On pullbacks aligning with revenue growth trends or earnings beats, using ValueSense for undervalued stocks to buy timing.