NEW YORK (TheStreet) -- I have done the math so many times I've lost count. I experimented with high and low price-to-earnings multiples, growing revenue and earnings and examined every financial metric under the sun. The commonality exhibited in stocks that consistently outperform the market and build wealth are dividend stocks with a history of increasing their payments.
Intuitively, it makes perfect sense. Companies that are able to raise their dividend have management teams executing well and increasing revenue and profit. Each earning's release is free marketing for the stock. Investors read about and take notice of any given company's success and become interested.
The shares receive a second and free marketing boost from news organizations announcing the dividend increases. Investors have thousands of stocks to choose from, gaining their recognition is no easy task. Of course, all the marketing in the world is worthless bestowing on a weak stock, but that's part of the point.
Companies raising their dividend payments are strong and they get noticed. It's no small wonder that they make shareholders rich. With other investment yields at all-time lows, it doesn't take much these days to get noticed.
I constantly search for companies that you can reasonably count on for further growth and increases in the dividends you will receive. I then break them into groups of strong stocks currently on sale. These are the stars I'm looking at now.
Neutral Tandem (IQNT - Get Report), doing business as Inteliquent, provides interconnection and interoperability solutions worldwide. It offers voice, IP transit, and Ethernet telecommunications services primarily on a wholesale basis. Based in Chicago, the company trades an average of 500,000 shares a day and has a market cap of $475 million.
Price To Book:3.8
Forward Estimated Earnings Payout Percentage:23%
After making a new multi-year high this month, the shares have retraced and at support, appearing ready to resume appreciating. From 2013 lows below $1, Inteliquient's shares have returned a 14 bagger for believers.
There's still reason to believe. The forward price-to-earnings is discounted based on expected growth. For example, the four analysts following the company expects $1.03 in 2014 and $1.08 per share profit on average, making the forward P/E is 13.5 and trailing P/E only 8.3.
Meanwhile, after a dip in earnings, the company is back on track and earnings are increasing, while the market plays catch up to fully discount its growth. Inteliquient's dividend history is shorter than I typically prefer, but the company is cash-rich and without long-term debt. During the last earnings conference call, Chief Financial Officer Kurt Abkemeier pointed out the latest dividend increase and stated the company expects to revisit another dividend increase in the future.
Remember, as investors we want to find growing companies that we can reasonably expect to raise their dividend. Adding icing on the cake, Inteliquient has issued one-time large dividends twice in the last two years.