BALTIMORE (Stockpickr) -- With conspicuous new all-time highs in the S&P 500 this week, you'd be forgiven for forgetting about dividend stocks. After all, it's easy to forget about the 1.9% annual yield in the S&P, when the big index is above 2,000 for the first time, and up 8.3% year-to-date.
But if you ignore the dividends for too long, you're leaving a lot of money on the table.
That's because, relative to near-zero interest rates, dividend payouts in the S&P 500 are currently higher than they've been in decades. And they're getting higher. In the last year, S&P components have put their record $1.53 trillion in corporate cash to work, ratcheting total dividend payouts by 15%.
All of that adds up. In total, dividends have contributed almost 20% of the S&P's total returns in 2014 (that's a number that's magnified even more when stocks aren't in rally mode). According to research from Wharton Professor Jeremy Siegel, reinvested dividends account for as much as 97% of total long-term market performance. Better yet, dividends even impact how big your capital gains are. Data from Ned Davis Research reveals that, over the last 36 years, dividend stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders.
But to find the biggest gains, it's not enough to simply buy names with big payouts today. You've got 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.