BALTIMORE ( Stockpickr) -- Well, it happened: Ben Bernanke announced recently that the Fed was finally kicking off QE3, sparking a monthly buying spree of $40 billion in mortgage-backed securities that's expected to go on until further notice.That open-ended timeline means that Ben's going to be racking up a huge bill. >>5 Stocks Set to Soar on Bullish Earnings If you're an income investor though, you should be sweating. After all, this latest round of quantitative easing is going to fuel inflation until the tap gets turned off, and it's taking place at the same time that Bernanke has promised extraordinarily low interest rates to remain par for the course. Low interest rates and high inflation means that this is going to continue to be a toxic environment for folks who own income-generating assets. Let me be clear: Inflation doesn't even need to be high for the current scenario to smash your income payouts. With the Fed pegging short-term rates near zero, it doesn't take much inflation at all to gut income investors' real returns. So fixed-income investors need to focus on a different sort of cash-generation tool in 2012: dividends. >>9 Dow Dividend Stocks With A+ Buy Ratings That's exactly why we're scouring the stock market for a new group of big-name stocks that look ready to hike their dividend payouts in the coming quarter. In other words, these five firms are getting ready to boost dividends; they just don't know it yet. For our purposes, that "crystal ball" is composed of a few factors: namely a solid balance sheet, a 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, especially as investors start to get antsy about this late-2012 rally. Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.
Quest DiagnosticsQuest Diagnostics ( DGX) has made big business of trivial lab diagnostics like bloodwork and drug tests. The firm's 2,000 locations make Quest one of the largest medical testing companies in the world, and the recent affirmation of healthcare reform in the U.S. could make the firm even bigger. With more patients insured, the volume of testing that Quest performs is likely to rise in kind. A changing set of tests should increase profitability as well. The firm has been expanding its offerings to include more complex testing products (such as genetic testing and pathology testing) that have high barriers to entry for physicians' practices to replicate. As a result, testing margins on those products tend to be more profitable for Quest. While improved physician tools are a nice plus that should help make customers stickier, they're unlikely to create a material defense against peers. Instead, a rising industry tide is likely to lift all ships in the medical diagnostics field. To be sure, Quest Diagnostics' 1.1% dividend yield hardly makes it a core income stock. But a strong balance sheet and improving profitability should lay the path for a hike to its 17-cent quarterly dividend check. The firm's Oct. 17 earnings call looks like a good opportunity for management to give investors a raise.
Pinnacle West Capital
Twitter and become a fan on Facebook.