Stock Quotes in this Article: CVS, IP, SJR

 BALTIMORE (Stockpickr) -- With earnings season in high gear, dividend-paying stocks are starting to build speed as well. Although the last few weeks have been quiet for dividend boosts (not surprising given the market holidays that surround year-end), we’re finally starting to see companies announce new payouts to shareholders once again.

In the last week, 14 companies announced increases in their dividends. But what’s most significant about those yield hikes is who is making them. Last week’s dividend increases included a fairly even mix of blue chips and small-caps, a favorable sign that U.S.-traded firms of all sizes are seeing financial improvement.

Of the 14 firms that increased their payouts to shareholders, six had previously increased their dividends during the third week of January 2010. That record of regular increases is a good sign for income investors; it signals a return to dividend normalcy.

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    Dividend stocks aren’t just attractive for their payouts, however; income stocks are historically a superior source of capital gains as well. Over the last 36 years, dividend stocks outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to a study from NDR.

    Right now, companies that are willing to part with cash in arguably tough times are worth a second look. And while companies that pay dividends are great, the companies that increase those dividend payouts over time are even better.

    Each week, we take a look at companies that are actively increasing their dividend payouts to shareholders. Without further ado, here’s a look at this week’s dividend stocks.

    For $48 billion integrated pharmacy chain CVS Caremark (CVS), 2010 was a challenging year that ultimately lead investors to higher valuations after lingering in the red for much of the second and third quarters. Shares of the company gained approximately 8% in 2010, vs. 12.7% in the S&P. But the firm’s constant dividend increases have helped lure investors to shares. With a 42.9% increase, CVS currently sports a 1.42% yield.

    In the pharmacy business, CVS is a behemoth. The company had its hands on more than 1 billion prescriptions last year through its 7,000 retail stores, mail-order pharmacy and online pharmacy arms. CVS was also one of the first retail pharmacy chains to embrace the in-store health clinic idea with its MinuteClinic business, a brand that’s currently in 500 locations throughout the U.S.

    With health care trends pointed toward increased costs regardless of political posturing or congressional infighting, CVS should find itself a big beneficiary of the increased spending.

    At present, CVS sits in strong financial health, with massive cash flow generation abilities and limited obligations compared to the rest of the industry. That fundamental profile should keep the dividends flowing in 2011.

    So hopes Metropolitan Capital Advisors, a New York-based investment management firm that counts CVS as a large positions. Other stakes for the firm include AT&T (T) and Bristol-Myers Squibb (BMY).

    As one of the world’s biggest manufacturers of paper, packaging materials and containerboard, International Paper (IP) isn’t the most exciting publicly traded company on the market today. But what the $12 billion paper manufacturer lacks in sex appeal, it makes up for in fundamental prowess -- a factor that’s showing through in the stock’s latest dividend increase. IP raised its payout to shareholders by 50% last week, bringing the stock’s quarterly dividend to 18.75 cents per share.

    Fundamental improvements have been the name of the game for International Paper in recent years. In 2005, the firm divested a number of longstanding timber assets, a related business that was nonetheless a distraction from the company’s core competency.

    As management shifted IP’s focus to manufacturing paper and packaging products, it also put added emphasis on improving balance sheet health, which had been languishing amid cheap capital costs and steady sales -- an environment conducive to borrowing. Today, the company is still not “cheap” by traditional valuation metrics, but it’s managed to improve its mid-term outlook.

    As IP benefits from increased demand, it should be able to wean itself off of limited-time government subsidies with minimal pain. The company’s burgeoning international business (which currently contributes 20% to the top line) should help considerably.

    Institutional ownership currently makes up 80% of International Paper’s shareholder list, and major owners include the Vanguard Materials Index Fund (VMIAX), a $764 billion mutual fund that holds a four-star rating from Morningstar. Other fund holdings include Monsanto (MON) and Praxair (PX).

    Canadian diversified communications company Shaw Communications (SJR) may not have met up with the S&P’s double-digit performance in 2010 (the stock gained 3.9%), but its 4.09% dividend yield has captured the attention of income investors. That increased yield comes as a result of the 4.6% dividend hike that the company announced last week, bringing its monthly payout to shareholders to 7.67 cents per share.

    With services that include cable and satellite TV, Internet and telephone, Shaw enjoys a very diversified group of offerings to its nearly 4 million customers. Now, the company is actively pursuing another business line: cellular phone service. As with the U.S., Canada’s current dominant wireless carriers already face staunch competition and moderate switching costs for customers, two factors that make Shaw’s foray into the business somewhat less appealing.

    That said, the company is focusing its footprint on western Canada, where the firm is already a major player in cable and fixed telephones. If the company can successfully leverage its current user-base effectively, it may well be able to compete. Shaw was able to purchase its wireless spectrum at bargain prices in 2008, and as a result, the company’s wireless business is already accretive to value. With almost 4 million subscribers, income investors should continue to expect strong financial performance from this high-yielding stock.

    For the rest of this week’s dividend stocks, check out the Dividend Stocks for the Week portfolio on Stockpickr.

    And if you haven't already done so, join Stockpickr today to create your own dividend portfolio.

    -- Written by Jonas Elmerraji in Baltimore.

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    At the time of publication, Elmerraji had no positions in stocks mentioned.

    Jonas Elmerraji, based out of Baltimore, is the editor and portfolio manager of the Rhino Stock Report, a free investment advisory that returned 15% in 2008. He is a contributor to numerous financial outlets, including Forbes and Investopedia, and has been featured in Investor's Business Daily, in Consumer's Digest and on MSNBC.com.