5 Dividend Hikes to Watch for This Earnings Season

Tickers in this article: AAPL DE JWN PII WM

BALTIMORE ( Stockpickr) -- It's earnings season, and that means that good times are here again for income investors.

The past couple of months have been a tumultuous time to be an income investor. The biggest challenge came from the fiscal cliff debacle, which threatened to smash real income returns with a dramatic increase in tax rates on dividend income. A last-minute agreement spared investors of that threat for 2013 -- even if dividend rates increased for the top 2% of earners, it beats what would have happened had the old tax laws just expired.

>>5 Stocks Insiders Are Scooping Up

Now earnings season is offering up some extra upside.

Traditionally earnings season and dividends go hand in hand; when firms announce how much money they're making, they also typically announce how much they're paying shareholders. And just like positive earnings numbers can spark buying in shares, so too can a big dividend boost. But it's not enough to just react to the dividend hikes -- you've got to step in front of them if you want to capture the biggest gains. That's why we're looking at a handful of stocks that could be getting ready for a dividend boost this quarter.

>>5 Breakout Trades to Profit From the 'January Effect'

In other words, these five firms are getting ready to boost dividends; they just don't know it yet.

In the past few months we've had some stellar success in finding future dividend hikes just by zeroing in on a few key factors. Now we'll look at our crystal ball and try to do it again.

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 the New Year.

Without further ado, here's a look at five stocks that could be about to increase their dividend payments in the next quarter.

>>5 Big Consumer Stocks to Buy on the Cheap Apple

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

Get Adobe Flash player

We'll start from the top -- with Apple (AAPL) , the biggest publicly traded company in the world. Apple made waves in March, when the firm announced that it would be initiating a $2.65 dividend payout -- the first dividend from Apple since the mid-1990s. But with Apple sitting on a mountain of cash, the move made more sense than most other uses of the firm's bank account. Even though this stock has been under pressure for the past few months, there's still reason to believe in shares of AAPL right now.