BALTIMORE (Stockpickr) -- Nothing does a better job of selling dividend investing like a market correction. So, in a lot of ways, the almost 5% decline in the S&P 500 this year was really a sales pitch for dividend investing.
Dividends are one of just a few ways that companies can directly impact their share prices. And between record earnings and more than $1.25 trillion in cash held on S&P 500 companies' balance sheets, there's a lot of latent value yet to be unlocked.
More important, that value translates into capital gains.
Over the last three and a half decades, dividends stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, according to data compiled by Ned Davis Research. The numbers are even more compelling when looking at companies that consistently increase their payouts.
To take advantage of that trend today, we're focusing on dividends stocks that look ready to hike their payouts. So instead of chasing yield, we'll try to step in front of the next round of stock payout hikes.
For our purposes, that "crystal ball" is composed of a few factors: namely a solid balance sheet, 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 to shareholders.
Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.