BALTIMORE ( Stockpickr) -- To paraphrase Charles Dickens, it's the best of times and the worst of times for income investors right now.
Yes, dividends have clearly caught investors' attention in the last few years, fetching the highest dividend yields for the S&P 500 in two decades -- and the record corporate profits to back up those payouts. But that income is streaming in at a time when the Federal Reserve has effectively pinned interest rates at zero and inflation rates above 2%, creating a toxic rate for savers who want to get exposure to fixed income investments.
One result of that combination is that income-seekers are relying on equities now more than they have in years past (with 10-year Treasuries yielding 1.51%, no one buying them is an income investor right now). And they're chasing yield in a way that hasn't been seen since back in 2008. But chasing yield is one thing -- and jumping in front of it is quite another. Today, we'll look into the crystal ball to try and find high-yielding firms likely to hike their payouts even more in the quarter ahead.For our purposes, that "crystal ball" is composed of a few factors: namely a solid balance sheet, a low payout ratio, and a history of dividend hikes. While those items don't guarantee dividend announcements in the next month or two, they do dramatically increase the odds that management will hike their cash payouts, especially as investors start to get antsy about this mid-2012 rally. >>ACTIVE STOCK TRADERS: Check out Stockpickr's special offer for Real Money, headlined by Jim Cramer, now! Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.