BALTIMORE (Stockpickr) -- Dividend-paying companies took a mini-break from hiking their payouts to shareholders last week.

Only 14 companies announced increased dividends, down from a record 35 the week before. That sort of decrease is normal as earnings season winds down and companies start saving up for next quarter's distributions. But just because fewer stocks hiked their yields doesn't mean that last week was any less significant.

After all, some of the biggest stocks on Wall Street raised dividends last week. And just as important, dozens of fixed-income funds did as well. While funds aren't normally part of our weekly look at dividend-raisers, it's certainly worth noting when big-name funds increase their payouts across the board. And they certainly made waves with last week's announcements.
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Equity increases are perhaps more significant than that. Historically, companies that pay higher dividends materially outperform those that don't, and when the market turns bearish, dividends could be the only semblance of return that investors see for a while.

Here's this week's round-up of recent dividend-increasers. These stocks represent some of the most interesting income investments on the market right now.

Retail leviathan Wal-Mart ( WMT) hasn't seen its growth machine stop chugging along even as its competitors have fought tooth and nail to maintain thin retail margins.

Instead, the company has improved efficiency and top-line numbers, generating enough profit in the last quarter to justify paying owners an even bigger piece of the pie. Last week, Wal-Mart announced that it was increasing its quarterly dividend by 11% to 30.25 cents per share.
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That increase gives the Bentonville, Ark.-based company a dividend yield of 2.25% -- a number that could get eaten away as the company's share price appreciates in 2010. Wal-Mart's position as a big box bargain retailer puts the store's doors squarely in the sights of consumers who continue to tighten their belts as the economy improves at a creep. And with Wal-Mart's pricing power over its suppliers, the company should also get business from cost-conscious consumers who are parting cash for higher-cost discretionary purchases. Across the board analysts expect Wal-Mart to continue to perform well for the rest of the year.

And so does the Fidelity Advisor Dividend Growth Fund (FADAX), an $839 million income fund that holds stakes in Wells Fargo ( WFC) and Microsoft ( MSFT) in addition to the fund's sizable position in Wal-Mart.

2010 has been kind to General Dynamics ( GD). Since the first trading day of the year, shares of the defense stock have appreciated more than 8% thanks in large part to strong earnings numbers and a diversified number of private sector offerings.

Last week, General Dynamics increased its dividend 10.5% to 42 cents per share, increasing the company's annual yield to 2.28%.

Defense revenues continue to be the backbone of GD's business. Around 70% of the company's income comes from its U.S. defense sales business. That's a sales mix that's proved to be extremely fortuitous as GD's civil aviation brands, such as Gulfstream, struggle in a stale market for high-cost private jet travel. M&A bargains could bode well for General Dynamics going into 2010 -- with growth-by-acquisition key to the company's strategy, new brands can currently be added to GD's portfolio relatively cheaply.

One fund that's betting on General Dynamics' continued success right now is the Vice Fund, an equity fund that focuses on "sin stocks", and carries Morningstar's three-star rating. Among the company's other holdings are Philip Morris ( PM) and Diageo ( DEO).

California-based self-storage REIT Public Storage ( PSA) announced an impressive 18.2% dividend increase last week, increasing its shareholder payback to 65 cents per share and prompting an intra-week rally in the company's stock price.

While most real-estate stocks got shellacked following the bursting of the property bubble, Public Storage actually continued to perform at a high level. That's because as consumers downsized and relocated for jobs, storage space became an in-demand commodity. As such, the REIT has been able to maintain an excellent balance sheet and generate double-digit margins quarter after quarter.
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Among Public Storage's biggest owners is the T. Rowe Price Real Estate Fund (TRREX), which also holds stakes in Simon Property Group ( SPG) and Boston Properties ( BXP) in its concentrated 39 stock portfolio.

For the rest of this week's dividend stocks, check out the Dividend Stocks portfolio on Stockpickr.

And if you haven't already done so, join Stockpickr today to create your own dividend portfolio.

-- Written by Jonas Elmerraji in Baltimore.

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Jonas Elmerraji is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.

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