Carnival

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

At first glance, it may seem strange to see Carnival ( CCL) topping off our list. Even though Carnival is the world's largest cruise line operator, the whole cruise industry has been facing some stiff economic headwinds in the last few years.

But Carnival's financials put the firm a cut above its peers in the cruise industry -- and now, consistently higher cash generation puts CCL in solid shape for a dividend hike. Currently, the firm pays out a quarterly 25-cent dividend for a 2.6% yield.

>>5 Stocks Hedge Funds Love -- and So Should You

Carnival owns more than 100 ships flying a host of different line flags. In addition to Carnival's namesake line, the firm's portfolio includes names like Holland America, Cunard, Princess, and more than a half-dozen other lines. That broad portfolio of brands diversifies Carnival across geographic areas and across demographic group,

giving the firm exposure to vacationers in all income brackets and on three continents. The cruise business is capital intense -- new ships can ring up at a price tag of nearly $1 billion -- so Carnival's scale is critical. Because of its size, the firm can spread costs across more vessels. And while fuel costs have been rising materially over the years, CCL indexes its prices to the cost of oil, reducing risk and taking the need for commodity hedging off the table.

Financially, the firm is in solid shape, with an investment-grade balance sheet and an ample cash position sitting in its coffers. With 2013 expected to be a much stronger year for cruising, Carnival should benefit more than most of its less profitable peers. That sets the stage for a dividend hike next quarter.

If you liked this article you might like

Analysts Wrong on iPhone; Retail Not Going Away: Best of Cramer

S&P, Dow Close at Record Highs, Brushing Off Geopolitical Concerns

Stocks Shake Off North Korea and London to Stay in Record Territory

Carnival Will Have Massive Cruise Ships Using Liquefied Natural Gas by 2018

Jim Cramer on North Korea, Equifax, Alphabet, Oracle, Nvidia and Southwest Air