Macy's M Chart M data by YCharts

Another retail name on our list this week is Macy's ( M). Despite challenging market conditions coming into play in the last quarter of 2012, Macy's is having a strong year -- shares of the $15 billion retail chain are up close to 23% since the start of the year. Those returns are getting even bigger. With Macy's 20-cent quarterly dividend payout, here's a look at why that 2.03% yield looks likely to increase:

Like other shopping mall anchors, Macy's struggled during the Great Recession as consumers traded down and sales suffered. But Macy's made more efforts to fix its model than most of its peers, improving its localized merchandising efforts and working on driving more traffic into its stores. A major restructuring dramatically reduced the firm's headcount and contributed to a return to profitability in recent years. More recently, the payoff has been incremental increases in same-store sales and margins.

With more than 850 Macy's and Bloomingdale's stores spread throughout the country, Macy's enjoys scale and brand recognition that smaller retailers lack. And its legacy stores in major U.S. cities boast some extremely attractive urban retail locations, like the firm's flagship store in New York City. Lately, management has been prioritizing investors with its dividend, while at the same time boosting shareholder yield by cutting down its debt load. With few other capital needs, that frees up more cash for a dividend hike at Macy's.

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