The widely diversified Zacks Transportation sector is facing multiple headwinds, ranging from inflation-induced elevated interest rates and weak freight demand to supply-chain woes. Geopolitical uncertainties and higher inflation continue to hurt consumer sentiment and growth expectations. Although inflation is cooling, the reading continues to be above the Fed’s long-term goal. As a result, the Fed is expected to hold interest rates higher for longer. Elevated interest rates do not bode well for the economy, as the same curtails consumer outlays and increases borrowing costs.Apart from high interest rates, the freight market downturn, driven by excess freight capacity than freight volumes, has hit the sector hard. Continuous erosion with respect to freight demand can be made out of the fact that the Cass Freight Shipments Index declined 1.3% month over month in April. This measure deteriorated month over month in five of the last six months, which confirms the overall declining trend. High fuel costs are hurting the bottom-line performances of transportation stocks, as fuel expenses represent one of the major input costs for transportation players. Adding to the woes, expenses are high on the labor front, courtesy of the multiple pay-related deals being inked in the space lately. Due to the aforementioned headwinds, the sector has declined 4.6% year to date against the S&P 500’s 7.6% growth.Zacks Investment ResearchImage Source: Zacks Investment ResearchBut do the above-mentioned challenges and other woes imply that investors interested in the transportation sector should shun the stocks belonging to this key sector? The answer is a firm no. Dividend-Growth Stocks to the RescueWe believe that dividend-growth transportation stocks should be on investors’ watchlists to withstand the headwinds and volatility. Stocks with a strong history of year-over-year dividend growth form a healthy portfolio with a greater scope of capital appreciation, as opposed to simple dividend-paying stocks or those with high yields.Furnishing one’s basket with such stocks shows prudence, as these provide an avenue of a steady income and a cushion against market risks. Needless to say, investors are always on the lookout for companies with a consistent and incremental dividend history.To guide investors interested in the transportation sector, we came up with certain parameters using the Zacks Stocks Screener. We shortlisted transportation stocks havinga) A dividend payout ratio of less than 60% (the dividend payout ratio — dividends paid/net income — gives the proportion of earnings paid out as dividends to shareholders. A payout ratio below 60 looks quite sustainable).b) A dividend yield of greater than 1% (dividend yield denotes the percentage of a company’s share price that it shells out as dividends annually).The selected stocks have exhibited dividend growth in the past five years, apart from currently carrying a Zacks Rank of 3 (Hold) or better.Based in Chicago, IL, Gatx Corporation (GATX) is a global railcar lessor with owned fleets in North America, Europe and Asia. Improvement in the North America railcar leasing market is expected to continue driving its growth.GATX currently pays out a quarterly dividend of 58 cents per share ($2.32 annualized), giving it a 1.77% yield at the current stock price. We remind investors that in January 2024, the company raised its quarterly dividend 5.5% to the current payout level. GATX currently carries a Zacks Rank #2 (Buy). The stock’s payout ratio is 34%, with a five-year dividend growth rate of 4.61%. GATX Corporation Dividend Yield (TTM) | GATX Corporation QuoteFedEx’s (FDX) efforts to reward its shareholders are praiseworthy. The company announced a 10% increase in its quarterly dividend to $1.38 per share in June 2024.FDX’s payout ratio is 29%, with a five-year dividend growth rate of 18.96% and a dividend yield of 2.03%. FDX currently carries a Zacks Rank #3. FedEx Corporation Dividend Yield (TTM) | FedEx Corporation QuoteExpeditors (EXPD) is based in Seattle, WA. The freight forwarder’s efforts to reward its shareholders are commendable. EXPD’s liquidity position is encouraging. The company currently carries a Zacks Rank #3.EXPD pays out a semi-annual cash dividend of 69 cents per share ($1.38 annualized), giving a 1.17% yield at the current stock price. We remind investors that in May, the company raised its quarterly dividend by 5.8% to the current payout level. EXPD’s payout ratio is 29%, with a five-year dividend growth rate of 9.02%. Expeditors International of Washington, Inc. Dividend Yield (TTM) | Expeditors International of Washington, Inc. QuoteMore By This Author:3 Solid Tech Funds To Buy As Nasdaq Hits New Milestone Bear Of The Day: Xerox Holdings 3 Solid Mutual Funds To Buy On Soaring Semiconductor Sales