The Skinny on Possible Dividend Boosts

Stocks that pay a dividend have consistently outperformed their nonpaying peers. In fact, Howard Silverblatt, market equity analyst at Standard & Poor's, calculated last November that dividends accounted for 41% of the benchmark S&P 500 index's gains since 1926.

I believe that dividend-paying stocks will deliver solid returns once again in 2005, especially the stocks that consistently reward investors with a higher payout each year.

With that in mind, I ran a screen for companies that have raised their dividends every year for at least a decade, focusing on the stocks that usually boost their payouts in the second quarter. This way, you readers have a chance to buy the names ahead of the next increase.

In alphabetical order, here are the names that came up:

Air Products(APD Quote) has increased its quarterly dividend 21 consecutive years, and I expect the next boost will come in mid-May. The industrial gas producer currently pays 29 cents a share, and its 1.9% yield is tops in the sector. After raising the payment 26% in 2004, management is likely to raise the dividend to only 30 cents a share this year (2%). Even so, Air Products' payment can be comfortably covered 2.6 times with expected fiscal 2005 earnings.

Fresh off reporting record fourth-quarter earnings of $8.4 billion, ExxonMobil (XOM Quote) will likely increase its dividend in late April for the 21st consecutive year. The integrated energy producer currently offers a 27-cent quarterly payment, and its 1.9% yield is at the midpoint of the industry range. I believe the company can increase its dividend to 30 cents a share, which it can cover 3.1 times with expected 2005 earnings.