5 Dividend Champs to Buy for 2013

Harman's products are popular in everything from high-end home and car audio systems to professional concert installations. As luxury spending continues to stay strong in 2013, that's panning out to strong performance for HAR's income statement. Last year, the firm managed to eclipse its pre-recession highs in sales and profits, and this year, it's on track for a repeat performance.

The premium pricing of Harman's products also affords the firm the ability to earn reasonably high net profit margins in its business. As audiophiles continue to spend big bucks on listening gear (and help sell non-enthusiasts on high-end audio gear as well), that's unlikely to change. Harman's financials are in excellent shape, with a $300 million net cash position on its balance sheet. That gives the firm ample dry powder for another dividend hike down the road.

TJX

The past year has been stellar for shareholders in TJX (TJX). The stock has rallied more than 20% in the last 12 months, buoyed by that same consumer spending boost that's pushed names like Darden and Harman higher. So even though TJX's 1% dividend yield looks paltry by comparison, the total returns on this stock have been hard to beat.

So has TJX's dividend growth. For shareholders who bought a couple of years ago, this stock's cost yield is closer to 3%.

TJX, which owns chains such as T.J. Maxx, Marshall's and HomeGoods, is the biggest off-price retailer in the country. A big part of TJX's success comes from its positioning in between manufacturers and consumers. The firm is critical to apparel and housewares makers because it helps them clear out huge swaths of older inventory without having to discount their own sales channels. On the consumer side, TJX provides a way to get name brands at a substantial discount. By straddling those two groups, TJX can command pricing power on both sides and earn margins that most retailers would kill for.

Like the other names on this list, TJX sports a solid balance sheet: the firm boasts more than $2 billion in cash that's offset by just $774 million in debt. I've said before that I think TJX is a likely candidate for a dividend hike in the near-term, and as its dividend catches up with its financial performance, investors should continue to benefit in a big way.

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