What Do Merck & Co., Cognizant Technology and Quest Diagnostics Have in Common? 

See what’s powering the AAII Dividend Investing model portfolio and why it especially works in 2026.

Dear Friend, 

What do Merck & Co., Cognizant Technology and Quest Diagnostics have in common? Each one was identified using the exact same three-part dividend growth strategy and each has significantly outperformed the market since. 

The AAII Dividend Investing (DI) portfolio is up 14.9% year to date with a 2.3% dividend yield, more than double the iShares Dow Jones U.S. ETF’s (IYY) yield of 0.9%.  

Recent model portfolio standouts include Cognizant Technology Solutions Corp. (CTSH), up +22.8% since addition, and Merck & Co. Inc. (MRK), up +43.1%, while long-term holdings like Oshkosh Corp. (OSK) and Quest Diagnostics Inc. (DGX) have risen +64.1% and +95.9%, respectively, since their addition. 

Data as of August 25, 2026. 

So what’s the commonality that all of the stocks share? Spoiler alert: It’s not solely high dividend yield. 

Today, I walk you through the strategy behind these stocks and why it consistently finds winners other approaches miss.

A Smarter Approach to Dividend Investing 

Unlike other strategies that focus solely on high payouts, AAII Dividend Investing targets companies that can deliver sustainable dividends and capital gains, creating a balanced, resilient portfolio that works even when markets fluctuate.  

Here are three things the DI strategy does well. 

• Total return, not just yield: The DI strategy targets stocks positioned for rising dividends, rising share prices and the ability to sustain or grow their dividend, so chasing a high yield alone never drives a portfolio decision. 

• Three-pillar screening: Every stock is evaluated on dividend growth, valuation and strength; together, these measures work to filter out companies that look good on one metric but are weak in others.

• Built-in guardrails against dividend traps: Requirements like free cash flow above dividend payouts as well as improving sales and earnings trends help catch red flags before a cut happens. 

AAII Dividend Investing Flash Sale

I’ve decided to extend a special offer to a select group of fellow investors, giving you the opportunity to join AAII Dividend Investing at a reduced rate.

Regularly $249 per year, you can subscribe today for just $2 and get full 30-day access.

But remember, this flash sale only lasts until midnight Central Time tonight. 

AAII’s Dividend Investing strategy identifies the best dividend opportunities by focusing on a select universe of well-financed companies with: 

• Strong growth trends in sales and earnings 

• Quality and financial strength to maintain and grow their dividend 

• Attractive valuations based on dividend yield and price-earnings ratio 

• A solid outlook for both price appreciation and higher dividends in the future 

Stocks are added to the model portfolio only when they meet these standards and are removed if they weaken or underperform — keeping the portfolio focused on quality, sustainable income and long-term price appreciation. 

Why Cognizant Technology Earned a Spot in the DI Portfolio

Let’s take a look at one of our most recent additions to the DI portfolio: a stock that has a 22.8% price return, in addition to paying dividends, since it was added at the beginning of May 2026. 

Cognizant Technology Solutions Corp. (CTSH) was added to the DI portfolio on May 6, 2026, and the company’s recent results reinforced that decision. In its second-quarter 2026 report, Cognizant Technology delivered adjusted earnings of $1.37 per share, up 4.6% year over year and in line with analysts’ expectations, with revenues climbing 4.5% year over year to $5.5 billion.

Growth was largely driven by its financial services segment, which grew 12% year over year. The company also continued rewarding shareholders directly, returning $157 million through dividends and $1.15 billion through share buybacks during the quarter.  

This performance builds on what first made Cognizant Technology a standout candidate: a five-year annualized dividend growth rate of 7.4%, a current streak of seven dividend increases and a shareholder yield of 7.4% that ranks in the top 9% of all stocks. 

And looking more recently, Cognizant Technology has earned a grade of A in both Dividend Valuation and Dividend Strength as well as a grade of B in Dividend Growth as of August 25, 2026, which lend support to its good recent performance.  

Together, these results show a company still executing on the fundamentals that earned it a spot in the portfolio in the first place. 

Flash Sale Ends Tonight 

This is your last chance to add AAII Dividend Investing to your toolkit at this special flash sale price.  

Get access to the 24-stock DI model portfolio, explore the watchlist of even more vetted dividend ideas, use the premium tools like the Dividend Screener and Dividend Grader, and receive my weekly commentary.

Plus, you’ll get additional AAII Member benefits like access to our monthly publication featuring in-house and guest writers; our small-cap value model portfolio; investor guides for tax planning, ETFs, mutual funds, brokers and more; webinars; local chapters; and our online community. All this is included with your one-month trial.

Sincerely,

Charles Rotblut, CFA 
Editor, AAII Dividend Investing