BALTIMORE (Stockpickr) -- The stock market has done an about-face in the last couple of months, shifting from a sideways slump to a rally that's currently on track for double-digit gains by the end of the year. Since the start of January, the S&P 500, for instance, has rallied 5.89%. If the big index can keep it up, that's good for a 12.52% gain by the end of December.
But capital gains are only part of the equation. If you're ignoring dividend payouts, you're doing yourself a huge disservice. In the last year, dividend payouts in among S&P 500 stocks have risen by 15.6%. That means that companies in the big index currently pay out more cash on a nominal basis than ever before.
Factoring in dividends to this year's return numbers, the S&P's gains sit at 6.96% so far, a 20% boost vs. the plain price gains alone. So, yes, dividends clearly matter for your total returns this year. But to find the biggest gains, it's not enough to simply buy names with big payouts today. You have to think about what they'll be paying tomorrow too.
So instead of chasing yield, we'll try to step in front of the next round of stock payout hikes.
For our purposes, that "crystal ball" is composed of a few factors: namely a solid balance sheet, 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 to shareholders.
Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.