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Stocks Under $10 with 50-100% upside potential - 14 days FREE!

5 Dividend Stocks Getting Ready to Hike Payouts

Stocks in this article: BBY CAT PCAR STX RSG

BALTIMORE ( Stockpickr) -- If you don't own dividend stocks right now, you're doing something wrong.

Even though most investors have been watching capital gains rack up in the S&P 500 with mouths agape, the fact is that dividend-paying stocks have gone further faster in this quality-driven stock rally. And as another wave of nervousness comes over Wall Street this week, those hefty income checks act as a pretty strong reminder of why dividends matter.

>>5 Stocks Under $10 Set to Soar

Yes, despite the "market overvalued" rhetoric that's been floating around for the last three or so years, dividend checks are very strong on a historical basis right now. In fact, the dividend yield of the S&P 500 is higher now than it's been on a sustained basis anytime since 1995.

And adjusting for the near-zero interest rates in the fixed income market, dividend payouts are higher than they've ever been before.

Better still, U.S. corporations are currently sitting on record profitability and cash reserves right now. That means that they've got the wherewithal to keep hiking their payouts into 2013 and beyond. One of the best ways do boost your own returns in 2013 is to step in front of the next round of dividend hikes; to do that, we'll take a look at our "crystal ball."

>>5 Big Stocks That Could Drop in May

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 three, they do dramatically increase the odds that management will hike their cash payouts, especially as investors start to get antsy about whether or not 2013's rally will be able to hang on.

Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.

>>Warren Buffett's 5 Favorite Stocks for 2013

Caterpillar

First up is Caterpillar ( CAT), the largest heavy equipment manufacturer in the world. CAT currently pays out a 52-cent quarterly dividend, a payout that adds up to a 52-cent yield at current price levels. But Caterpillar looks ready to increase that payout in the next quarter. Here's why.

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