Kimberly Clark Corporation (NYSE: KMB) was another one of our Stocks To Hold For The Next Decade, and a part of that is because the company has been on a steady dividend hike path and on a plan to return capital to shareholders.  If the company boosts its payout, this would be about 40 consecutive years of dividend hikes.  It dates back to the 1800′s and it is smaller than Colgate-Palmolive and P&G.

Perhaps the biggest issue is whether the hike will be by the same amount
as we saw last year when they quarterly rate went to $0.66 from $0.60.  Our guess is not, probably a hike to $0.64 per quarter or $2.56 per year.  Thomson Reuters has estimates of $4.64 EPS for 2010 and $5.01 EPS for 2011.  Even if the in-store promotion cost pressures remain in 2011, there is much more room for Kimberly Clark to boost that payout.  Its current yield is already 4.1% and at $64.28 its 52-week trading is $58.25 to $67.24.

NextEra Energy, Inc. (NYS: NEE) is the former FPL Group or Florida Power & Lighting.  We do not like when companies change their names, but that often brings change in and of itself.  NextEra did have some old legacy environmental ‘issues’ it wanted to distance itself from.  The company has more than 4.5 million retail power customers and it also owns a generation and transmission business along with a broad portfolio of renewable energy.

It is possible that the NextEra dividend hike may come as soon as the earnings report this week.  The company has historically raised its dividends each year and its $2.00 current annualized dividend is likely to be raised to at least $2.10 per year. That would still place its dividend coverage under half of its estimates of $4.35 EPS target for 2010 and $4.46 EPS in 2011.  This is one where a hike is much more likely than not by our count.  At $54.42, the 52-week trading range is $45.29 to $56.26.  If a hike comes this week, that would get the dividend yield closer to 4%.

Target Corporation (NYSE: TGT) still greatly lags its rival Wal-Mart in yield after last year’s big boost from a rate of $0.17 per quarter to $0.25 per quarter.  As the economy improves and as it unloads its credit card receivables portfolio, Target should have ample room to grow its dividend.  The expansion into Canada and the slower same-store sales growth should not get in the way of its ability to boost its dividend payout to its retail shareholders.

The current yield is only about 1.8% and we would not look for a dividend hike until the summer.  With estimates of $3.90 EPS for 2010 and $4.39 EPS for 2011, Target has much more room for dividend growth.  As the company is fighting same-store sales issues and expanding Northward, we’d look for “only” a 10% dividend growth this year to $0.275 or $0.28 per quarter unless things get better.  At $55.73, Target’s 52-week range is $48.23 to $60.97.

Wal-Mart Stores, Inc. (NYSE: WMT) is the king of retail and its 2.2% dividend yield is actually much higher than most giant retailers pay to shareholders.  The $1.21 annualized dividend still generate a yield of only 2.2%.  This makes it one of the lower DJIA components in yield and we won’t be letting a secret out if we note that the stock has been dead money for a decade.  More importantly, its share buybacks have done little to reward holders.  With a near-$200 billion market cap, does the company realistically think it can make a huge difference here buying back stock?  What could make a large difference is a higher dividend, and as we have noted before it could even put pressure on its peers and competitors by forcing them to raise their dividends to where they have less dividend coverage compared to earnings.

Wal-Mart may raise its dividend in the next six to eight weeks and we would prefer for the company to boost its payout to at least $0.35 per quarter.  That would bring the yield to 2.5%.  If Wal-Mart really wants to make a statement, it would aim for as much as $0.40 per quarter to get closer to 3%.  We’ll aim for the realistic approach of $0.35 per quarter.  At $1.40 paid out for a year, its 2010 estimates are $4.05 EPS and its 2011 estimates are $4.45 EPS.  After all, how much more cap-ex does Wal-Mart need for the U.S.?  At $55.77, its 52-week range is $47.77 to $56.27.

Again, if you want to see last week’s companies we think will hike dividends substantially in 2011 that list includes J.P. Morgan Chase & Co. (NYSE: JPM), Wells Fargo & Co. (NYSE: WFC), and Bank of America Corporation (NYSE: BAC) in banks; Cisco Systems, Inc. (NASDAQ: CSCO) for sure and maybe even Apple Inc. (NASDAQ: AAPL) if things get worse for Steve Jobs in tech; and General Electric Co. (NYSE: GE), United Technologies Corp. (NYSE: UTX), and 3M Co. (NYSE: MMM) in conglomerates.

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JON C. OGG