In a weak economic recovery such as what the U.S. is currently experiencing, "cash is king" can be a good philosophy for finding winning stocks. In this case, I do not mean holding cash; I mean finding the companies that are great at generating it in adverse economic conditions. Rising dividends are a sure sign that, first, a company is a cash generator and, second, that management is confident the business fundamentals can continue to improve.
In finding a set of dividend risers, I ran a screen that picked out names that have increased their dividends substantially over the past three years. As a starting point for further research, my screen produced this list of dividend deliverers.
A few stood out immediately. Cummins (CMI) is a beneficiary of a resurgence in the industrial economy, including the mining sector. KLA Tencor (KLAC) is leveraged to a slowly but steadily growing semiconductor group, which could emerge from its latest downcycle. Seagate (STX) is one of my favorites at the moment, with a cheap multiple and high yield, as well as benefit from restricted industry supply due to the Thai floods last fall.
Mattel (MAT) has some world-beating franchises in Barbie and American Girl (my daughters keep the latter in business), and I recently highlighted Williams Cos. (WMB) as about to surprise with an accelerating general-partner fee structure in the limited partnerships it manages. The "trade-down" economy is greatly benefitting Ross Stores (ROST) and TJX Cos. (TJX) as well.
This list is a good starting point for finding names that can provide current yield, higher future yield and solid earnings and cash flow growth -- a winning combination!