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Earnings season is off to a mixed start and this has increased market volatility, which is making some investors nervous given last year's strong performance. Still, volatility shouldn't be viewed as something to fear because that's often what brings the best investment opportunities over a brief period of time.

How can volatility be a positive thing for investors?

Simply put, volatility causes some stocks to become undervalued and others to become overvalued. Therefore, no matter how you split it volatility creates new opportunities in the market.

With earnings season in play this is a great time to review how investors can take advantage of market volatility while avoiding value investment traps. Now let's get down to the meat and potatoes of how to take advantage of Mr. Market's mood swings.

First, we know that past performance isn't a guarantee of future performance but in my view it's a sound indicator of what we can expect moving forward.

Why should investors give much weight to past performance you ask?

I think Aristotle explained it best when he said "we are what we repeatedly do. Excellence, then, is not an act, but a habit." If we use this logic then we can surmise that quantifiable metrics based off past performance can help identify which dividend stocks have an above-average probability of outperforming the S&P 500 in the future.

One great metric to use when trying to identify which dividend stocks have a good chance of outperforming is the company's annualized revenue growth rate. Specifically, I'm talking about a company's 3-year annualized Revenue Growth Rate. A 3-year snapshot, especially now, gives investors a good picture of how well companies performed during global events that involved substantial economic turmoil such as the US Fiscal Cliff for example.

The next metric we'll use today is Operating Profitability. When it comes to Operating Profitability I'm looking for companies that have been able to grow their Operating Income (year-1 over-year-2) by at least 5%. Top line growth is great but when it's paired with bottom line growth as well that's even better.

The third metric investors can check is a stock's historical performance. Again, over the last decade companies have gone through a multitude of events that involved substantial economic uncertainty. By screening for stocks that have historically performed well we can identify on some level where investors tend to put their money when you know what hits the fan. In other words, a savvy investor can use Mr. Market's tendencies to their advantage.

To create this short list of dividend stocks I started by screening for companies that offer a real dividend yield (X>3%) and have a Forward P/E valuation of 12 or less. To narrow the list of dividend stocks I focused on companies whose 3-year Revenue Growth Rate was not only 10% or greater but whose Operating Income Growth Rate (Year-1 over Year-2) had also increased by at least 5%. Finally, I screened for companies that had at least a Current Ratio of 1 or higher to make sure there weren't any glaring liquidity issues.

The list of stocks is ranked from highest to lowest by market capitalization:

Sasol, Ltd. (NYSE:SSL)

Sasol Limited is an integrated energy and petrochemical company that operates worldwide. At this time Sasol, Ltd. has a Market Cap. of $31,689M and a Forward P/E Ratio of 8.87. Currently, Sasol, Ltd. offers a dividend yield of 3.41% and has a current ratio of 2.31.

Over the last three years Sasol, Ltd. has seen its revenue grow by 14.03% and its Operating Income (Year-1 over Year-2) by 10.53%.

Telefonica Brasil S.A. (NYSE:VIV)

Telefonica Brasil S.A. provides fixed-line telecommunications services to residential and commercial clients in Brazil. At this time Telefonica Brasil S.A. has a market cap of $22,578M and a Forward P/E Ratio of 5.40. Currently, Telefonica Brasil S.A. offers a dividend yield of 4.36% and has a current ratio of 1.26.

Over the last three years Telefonica Brasil S.A. has seen its revenue grow by 29% and its Operating Income (Year-1 over Year-2) by 24.41%.

Analyst Note:

On January 15, 2014, HSBC securities Upgraded Telefonica Brasil S.A. from Neutral to overweight.

Ensco PLC (NYSE:ESV)

Ensco PLC provides offshore contract drilling services to the oil and gas industry all over the world. At this time Ensco PLC has a market cap of $12,807M and a Forward P/E Ratio of 6.96. Currently, Ensco PLC offers a dividend yield of 4.10% and has a current ratio of 1.61.

Over the last three years Ensco PLC has seen its revenue grow by 31.56% and its Operating Income (Year-1 over Year-2) by 100.38%.

Analyst Note:

On January 14, 2014, Howard Well Downgraded Ensco PLC from Focus Stock to Sector Outperform but held its price target to $80.

Oi SA (NYSE:OIBR)

Oi S.A. offers integrated telecommunication services to residential customers, companies and governmental agencies throughout Brazil. At this time Oi SA has a market cap of $2,986M and a Forward P/E Ratio of 1.49. Currently, Oi SA offers a dividend yield of 21.04% and has a current ratio of 1.03.

Over the last three years Oi SA has seen its revenue grow by 32.09% and its Operating Income (Year-1 over Year-2) by 203.72%.

I hope this short list of dividend stocks with improving profitability and strong revenue growth over the last three years helps investors as they do their own due diligence.

Source: 4 Dividend Stocks With Strong Revenue Growth And Improving Profitability Worth Checking Out