BALTIMORE (Stockpickr) -- As we look back on the year that was 2011, two things quickly become apparent: It was a rough year for stock investors, but it was a pretty good year for dividend payouts.

Surprising though it may seem, those two factors aren't mutually exclusive. In 2011, the S&P 500 essentially closed the year flat; a very painful flat year when all of the volatility of the past 12 months is factored in. Dividend payers fared quite a bit better -- while dividend indices like the S&P 500 Dividend Aristocrats Index finished 2011 with much larger total returns, those raw numbers don't really tell the whole story. Instead, it makes sense to look at dividend increasers.

All told, 101 companies increased their dividends in 2011 according to data collected by S&P Indices. Those 101 firms ratcheted their payouts higher by $50.2 billion -- nearly twice the increase in dividend payouts that companies delivered in 2010.

>>4 Companies That Are Bleeding Cash

And with corporate cash and profits still at all time highs, those trends are likely to continue this year.

That's a good sign for stock returns: 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, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.

That's why we pay close attention to the firms that are shoveling more corporate cash to shareholders each week. With that, here's a look at five of the stocks that hiked payouts in the last week.


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The last year has been stellar for department store giant Macy's ( M - Get Report). Shares of the $14.7 billion firm have rallied more than 50% in the last 12 months, buoyed by strong sales and the ability to execute on its growth strategy -- a rarity in retail lately.

Management decided to build on that success this week by doubling the firm's quarterly dividend payout to 20 cents per share. For those keeping score, that's the second time Macy's has doubled its dividend in the last year.

Besides its eponymous stores, Macy's owns Bloomingdales as well as online commerce sites for both of those brick-and-mortar chains. While those online properties offer little in the way of an economic moat, the legacy department store business actually does look attractive right now. Macy's has been adept at pushing through a new, more customized merchandising strategy, fitting the products on shelves more to a particular store's demographics. That's helped draw customers into department stores, something peers have been struggling to do lately.

While retail is generally a capital-intensive business, Macy's balance sheet looks fairly strong. The firm's debt load is reasonable, and it's got ample cash on hand. That cash cushion should help to smooth out the company's increased dividend payout going forward.

Macy's is one of the top holdings of David Tepper's Appaloosa Management, comprising 5.6% of the total portfolio as of the most recently reported quarter.


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Another name that hiked its dividend payout substantially last week is DDR ( DDR), a $3.7 billion shopping center REIT that owns 546 shopping centers spread throughout the U.S., Puerto Rico, and Brazil. DDR increased its dividend by 50% last Thursday, bringing its quarterly payout to 12 cents per share. That gives DDR a solid 3.58% yield right now.

Don't be fooled by the apparent real estate exposure of a REIT. It's better to think of a REIT like DDR more as an income-generation instrument than a way to get exposure to commercial real estate.

There are a couple of good reasons for that. Frst is the fact that most commercial REITs sign long-term triple-net leases with tenants. That keeps them off the hook for things such as property taxes, maintenance and insurance, leaving them to collect consistent rent payments instead.

Another critical factor is the REIT status itself. Because REITs such as DDR are obligated by law to pay out the vast majority of their incomes to shareholders (before taxes), they're truly designed to throw cash over to your portfolio. DDR's diverse property portfolio makes the firm a fairly limited risk holding, even if that comes at the expense of a higher yield.


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A dividend hike was one of the few good things that shareholders of Williams-Sonoma ( WSM - Get Report) got yesterday. The $3.5 billion high-end housewares stock reported holiday sales numbers to Wall Street yesterday morning, disappointing investors with poor guidance and underwhelming sales before offering up a 29% dividend increase. Shares caved double-digits in yesterday's trading as a result.

While the update was hardly bullish, there are some other silver linings to WSM's performance. While the firm is another one that had heavy secondary exposure to the housing market, sales actually rebounded in fiscal 2011, rising up above the revenue numbers investors saw in 2009 and 2010. International exposure likely holds the keys to growth for Williams-Sonoma; the firm will need to be smart about where it opens up shop abroad to get ahold of its core demographic. The decision to franchise international locations is a good start.

From a financial standpoint, the firm is in solid shape with effectively no debt and a fairly large cash position. Yesterday's dividend hike brings the company's payout to 22 cents per share -- that's a 1.98% yield right now. While this is hardly a core income holding, it is a good way for investors to get exposure to middle class consumer spending.

WSM shows up on a list of Goldman Sachs' Consumer Stock Best Buys for 2012.


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HVAC distributor Watsco ( WSO - Get Report) may not have the most exciting business, but the firm does have a solid track record for generating cash and passing it onto shareholders. For dividend investors, cash generation capabilities trump exciting product lines any day.

Watsco generates the lion's share of its revenue by selling replacement heating and cooling systems to homeowners, a business that's heavily correlated with the housing market. Now surprisingly, that connection has made investors anxious about this stock in the last few years. But the bear scenario for Watsco hasn't played out.

The firm has actually seen substantial revenue growth in the last several years, its saving grace likely being tied to the fact that around 70% of sales come from existing construction. Last week, management announced a 9% dividend hike, bringing the firm's payout to a quarterly 62 cents. That's a 3.64% dividend yield at current price levels.

Watsco is one of TheStreet Ratings' top-rated industrial distributors stocks, with a B+ buy rating.


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Ingersoll-Rand ( IR - Get Report) is in the same boat. Like Watsco, the firm is in the air conditioning business; not to mention the security system business and the golf cart business. That motley crew of industrial products gives Ingersoll-Rand a sales stream that's highly dependent on the state of the economy -- tight capital means harder sales for the firm's big-ticket items.

While the company's diversification is enviable, the effect on its income statement is probably negligible. After all, its products are still all industrial offerings.

That said, brand recognition is a key part of Ingersoll-Rand's strategy. With names such as Trane, Club Car, and Schlage, the firm's products have good reputations and tend to be league leaders in their respective industries -- a factor that somewhat offsets the firm's dependence on demand for industrial goods.

The company's 33% dividend hike during the last week of December should help placate investors in the meantime.

To see these dividend plays in action, check out the Dividend Stocks for the Week 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