5 top stocks with dividends set to rise in 2014

Although the recently announced US Federal Reserve’s decision to ‘taper’ should perhaps instill some confidence into markets that the US economy is improving, recent high profile earnings downgrades such as those issued by QBE Insurance (ASX: QBE) and Wotif (ASX: WTF), highlight the tough trading conditions many companies and industry sectors are facing as we enter calendar year 2014.

As investors have seen this last week, companies who disappoint have been dealt with harshly and their share prices savaged. As experienced investors know, it’s impossible to completely avoid owning companies that disappoint. However a focus on companies who have the ‘wind at their backs’ and are forecast to grow earnings is a good place to start. Importantly, for income-seeking investors, identifying companies with earnings growth should mean a growing stream of dividends as well.

AGL Energy (ASX: AGK) has significant market share in the generation and supply of energy to both households and businesses. AGL has been particularly focused on increasing its exposure to thermal and renewable energy sources, which should provide long-term benefits to shareholders. With what can be described as a defensive earnings base and a dividend forecast to increase from 63 cents per share (cps) to 65.8 cps, AGL shareholders should be reasonably confident that they will receive higher dividends in financial year (FY) 2014. (Note: Forecasts are based on analyst consensus data provided by Morningstar).

ASX (ASX: ASX) is currently enjoying a boost in business thanks to the flood of new listings. These listings increase the firm’s fee income and also benefit trading volumes. According to the ASX’s website the stock exchange operator has just welcomed its 103rd ASX-listing this calendar year, which happened to be travel insurer Cover-More Group (ASX: CVO). Analyst consensus is forecasting a rise in dividends to 177.4 cps from 170.2 cps.

Boral (ASX: BLD) is benefiting from an increase in demand for its building supplies both domestically and in foreign markets. The cyclical upswing in demand should see earnings rise through the cycle, which should support higher dividend payments. Currently the consensus forecast sees an increase in the dividend from 11 cps to 12.7 cps.

Fortescue Metals Group (ASX: FMG) is set to benefit from the completion of its port expansion, which will increase the miner’s export capacity to 155 million tonnes per annum. With volumes set to grow and the iron ore price holding up solidly, analysts are forecasting an increase in FY 2014 dividends to 11.4 cps from 10.8 cps in the previous corresponding period.

Wesfarmers (ASX: WES) is currently forecast to increase its ordinary dividend from 180 cps to 200 cps. However thanks to the recent sale of the Wesfarmers insurance division to Insurance Australia Group (ASX: IAG) for $1.845 billion, shareholders could be in line to benefit from a capital return or special dividend during FY 2014 as well.

Companies which can consistently grow their earnings and dividends can make great additions to a portfolio.

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Motley Fool contributor Tim McArthur owns shares in QBE Insurance.

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