BALTIMORE (Stockpickr) -- At the start of February, Mr. Market flipped a switch. Suddenly, the hottest momentum names of 2013 weren't working so well in 2014. In their place, the best-performing names became the staid, boring blue chips.
In those last two months, the momentum-rich Nasdaq Composite has struggled to climb 1.26% higher, while the less exciting Dow Jones Industrial Average has actually stuffed gains of almost 4% in investors' pockets over the same period. Why the outperformance in outsized stocks?
It has a lot to do with the fat dividend payouts that you can find in the Dow.
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.