Blue-Chip Stocks Due for a Dividend Boost

If you’re in the market for income, then you’re constantly on the hunt for companies that keep their foot on the dividend pedal. And so far, 2012 has proven to be a stellar year when it comes to the number of big companies increasing their quarterly payouts to shareholders. The latest blue chip to put a smile on shareholders’ faces was beverage behemoth PepsiCo (NYSE:PEP), but earlier this year we saw dividend boosts from a slew of the elite S&P 100 stocks. In fact, nearly one-third of S&P 100 companies have increased their dividend payouts in 2012.

The list below shows S&P 100 companies that already have announced an increase in their payouts this year:

Company Ticker Company Ticker
3M MMM Goldman Sachs GS
Abbott Laboratories ABT IBM IBM
Allstate ALL Johnson & Johnson JNJ
American Express AXP JPMorgan Chase JPM
Chevron CVX MasterCard MA
Cisco Systems CSCO Norfolk Southern NSC
Coca-Cola KO Occidental Petroleum OXY
Colgate-Palmolive CL PepsiCo PEP
Comcast CMCSA Procter & Gamble PG
Deere & Co. DE Qualcomm QCOM
Devon Energy DVN Raytheon RTN
Dow Chemical DOW Schlumberger SLB
DuPont DD Time Warner TWX
Exxon Mobil XOM U.S. Bancorp USB
Freeport McMoRan FCX Wal-Mart WMT
General Dynamics GD Wells Fargo WFC

In addition to this list, we have tech icon Apple (NASDAQ:AAPL), which until this year had refrained from giving back any cash to shareholders. In March, Apple surprised Wall Street with the announcement that it would begin paying its first quarterly dividend since 1995 later this year.

So, with all these mega-cap stalwarts increasing shareholder payouts, the logical question is which companies are most likely to boost dividends next?

To find the likely suspects, I looked at S&P 100 components’ dividend-related metrics such as yield, payout ratio and cash on hand. The thesis here is that companies with a relatively low yield, low payout ratios and a lot of cash on hand would be the most likely candidates to increase their dividend payments.

After sifting through the data, I came up with several companies that I suspect are the most likely candidates for a dividend increase in the near future.

Perhaps the biggest of these stocks is tech giant Oracle (NASDAQ:ORCL). The company has a payout ratio (the amount of earnings paid out in dividends to shareholders, calculated by dividing the dividend per share by the earnings per share) of just more than 12, and a paltry 0.8% dividend yield. Oracle also has cash on hand of some $13.8 billion, and this confluence of factors makes it a great candidate for increasing its payout.

Another likely dividend booster is UnitedHealth Group (NYSE:UNH). The insurer has metrics similar to Oracle, with a payout ratio of just over 12.4, a dividend yield of 1.04% and $14.3 billion in cash on hand.

Yet another solid candidate that jumped out at me is automaker Ford (NYSE:F). The company has a payout ratio of 13.6, a dividend yield of 1.8% and more than $17.1 billion in cash. Ford plans to use some of that cash to expand its China operations, but it also can use some of that cash to put dividend investors in the driver’s seat.

Honorable mention stocks here using the aforementioned criteria are Anadarko Petroleum (NYSE:APC), FedEx (NYSE:FDX), Halliburton (NYSE:HAL), National Oilwell Varco (NYSE:NOV) and Visa (NYSE:V).

Of course, time will be the arbiter of whether my speculation proves prescient. It could turn out that none of the aforementioned companies end up boosting their respective payouts. But I say if you’re an investor chasing the next dividend divas, these stocks definitely should be placed on your income watch list.

As of this writing, Jim Woods did not hold a position in any of the aforementioned securities.

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