Stocks that pay a dividend have consistently outperformed their nonpaying peers. In fact, Howard Silverblatt, market equity analyst at Standard & Poor's, calculated last November that dividends accounted for 41% of the benchmark

S&P 500

index's gains since 1926.

I believe that dividend-paying stocks will deliver solid returns once again in 2005, especially the stocks that consistently reward investors with a higher payout each year.

With that in mind, I ran a screen for companies that have raised their dividends every year for at least a decade, focusing on the stocks that usually boost their payouts in the second quarter. This way, you readers have a chance to buy the names ahead of the next increase.

In alphabetical order, here are the names that came up:

Air Products has increased its quarterly dividend 21 consecutive years, and I expect the next boost will come in mid-May. The industrial gas producer currently pays 29 cents a share, and its 1.9% yield is tops in the sector. After raising the payment 26% in 2004, management is likely to raise the dividend to only 30 cents a share this year (2%). Even so, Air Products' payment can be comfortably covered 2.6 times with expected fiscal 2005 earnings.

Fresh off reporting record fourth-quarter earnings of $8.4 billion, ExxonMobil will likely increase its dividend in late April for the 21st consecutive year. The integrated energy producer currently offers a 27-cent quarterly payment, and its 1.9% yield is at the midpoint of the industry range. I believe the company can increase its dividend to 30 cents a share, which it can cover 3.1 times with expected 2005 earnings.

Even though Johnson & Johnson is currently in the process of buying Guidant ( GDT) for $25 billion, I expect it will boost its 28.5-cent quarterly dividend in late April. The health care giant has raised its payout 41 consecutive years, and the 1.7% yield is equal to what the average S&P 500 stocks offers. The only thing more consistent than J&J's dividend is its earnings, which have grown at a compound annual rate of 15% over the past decade. I believe the company can afford to bump up its dividend to 30 cents a share, which it could cover with 35% of expected full-year earnings.

Marshall & Ilsley ( MI) will likely increase its dividend in late April for the 32nd consecutive year. The Wisconsin-based bank's 2% yield can be covered 3.6 times with expected 2005 earnings, but the company's payment is at the low end of its regional peers. I believe the company could afford to raise its quarterly dividend to 25 cents a share (2.4% yield) from 21 cents, though readers looking for regional bank exposure in this neck of the woods should also consider Associated Banc's 3% yield.

PepsiCo has raised its quarterly dividend 32 consecutive years, and I expect the next boost to come in early May. Management stepped up and increased the payment 44% in 2004, to 23 cents a share. Even so, the company's 1.7% yield is still 70 basis points lower than what fellow beverage maker Coca-Cola offers. I expect PepsiCo will raise its dividend to 25 cents a share, indicating a 1.8% yield that it can comfortably cover with 39% of expected full-year earnings.

Protective Life has boosted its dividend 14 consecutive years, and the next increase of the 17.5-cent quarterly payment could come in early May. The life insurer's 1.7% yield is at the midpoint of the industry range and can be covered 5.1 times with expected 2005 earnings. With that in mind, I think the company could comfortably afford to pay 20 cents a share (1.9% yield).

Teleflex will likely increase its quarterly dividend for the 27th consecutive year in late April. The industrial manufacturer currently pays 22 cents a share, which the company could boost to 25 cents (2% yield). The new payout would be at the midpoint of the industry range and could be covered with 32% of expected 2005 earnings.

I believe Tootsie Roll will raise its dividend for the 41st consecutive year in late May. The candy maker currently pays out 7 cents a share each quarter, and recent history suggests the payment will be raised to only 7.5 or 8 cents. Either way, the 1% yield would represent only 23% of expected full-year earnings, and I believe readers would be better served in this sector by Hershey Foods' 1.5% dividend or Wm. Wrigley Jr.'s ( WWY) 1.6% payment.

W.W. Grainger has boosted its quarterly dividend 32 consecutive years and will likely raise the payout again in late April. The industrial equipment distributor's 20-cent payment (1.3% yield) is just 23% of expected 2005 earnings, and I'd like to see management deliver a sizable increase to 25 cents or 30 cents a share, which is more representative of the company's consistent cash flow and lengthy dividend history.

David Peltier is a research associate at TheStreet.com In keeping with TSC's editorial policy, he doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Peltier welcomes your feedback and invites you to send your comments to

david.peltier@thestreet.com.

Interested in more writings from David Peltier? Check out his newsletter, TheStreet.com Dividend Stock Advisor. For more information,

click here.