Dividend growth investing focuses on companies increasing payouts to shareholders for financial security. While dividend growth stocks are considered less volatile, they have underperformed the broad US equity market over the past decade. The Morningstar US Dividend Growth Index includes 397 US companies with positive earnings forecasts and a payout ratio below 75%.

Despite underperformance, dividend growth stocks are less volatile than the market overall. The index, while lacking exposure to top tech companies like Nvidia and Amazon, has been less affected by market fluctuations. Sectors like financial services and healthcare are growing in dividend growth, while technology stocks are increasing dividends more than in the past.

Dividend growers may not match the overall market in terms of quality or performance, but they offer a smoother ride for risk-averse investors. While they may go through periods of underperformance, dividend growth investing can be a defensive strategy. Companies increasing dividends can still be a reasonable investment option, especially during market volatility.

Read more at Morningstar: The Surprising Truth About US Dividend Growth Stocks