This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

4 Stocks Ready for Big Dividend Hikes in 2013

NEW YORK ( Stockpickr) -- Nearly half a decade after a deep recession, the U.S. economy may finally be poised for a sustained upturn. Economists are now looking for GDP growth in the second half of 2013 to approach 3% or even exceed that level.

A firming economy can have a profound impact on a company's capital allocation strategies. If the economy can finally gain altitude, companies will be increasingly willing to part with all of the cash that has been piling up on balance sheets.

>>5 Stocks Poised for Breakouts

Some of that cash will be spent on share buybacks and acquisitions, but a big chunk of the money will be earmarked for major dividend hikes. And it's pretty easy to spot the companies that are best-positioned for dividend increases: the firms that still maintain very low payout ratios. Companies that pay out less than 20% of their income can still manage to double their dividends and maintain a payout ratio in the reasonable 35% to 40% range.

Here are four stocks that are likely on the cusp of big dividend hikes.

>>5 Stocks With Big Insider Buying

Ford Motor

In the middle of the last decade, Ford Motor (F) paid out 40 cents a share in annual dividends. That dividend was eventually eliminated to conserve cash, but thanks to a recent doubling in the quarterly dividend to 10 cents a share, Ford is right back to that 40 cents a share annualized payout.

And this automaker is just getting started. Ford is now so much more profitable than before, and its cash-rich balance sheet is so much stronger, that the dividend might double again from here. A hike to an 80 cents a share annual payout would equate to a 6.1% dividend yield.

Considering that Ford is now quite profitable -- and poised to become even more profitable in coming years as the European and U.S. economies improve -- management will become less fixated on maintaining absurdly high levels of cash. The company had $23 billion in gross cash at the end of 2011 and $27 billion at the end of 2012, and it should have $35 billion in cash by the end of 2014, according to Merrill Lynch.

1 of 3

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs