The economic choppiness is coming to a head with the age of dividend hikes. The pressure is going to remain for companies to continue returning capital to shareholders while also looking for selective global growth opportunities. The established Dow Jones Industrial Average components traditionally offer far higher dividend yields than the other top indexes, and 24/7 Wall St. is offering a case-by-case outlook for what investors should expect in DJIA dividend trends in the weeks, months and even in the year ahead.

If you add up the past 12 SPDR Dow Jones Industrial Average (NYSE: DIA) dividend payments, the DJIA yield has been almost 2.5% over the last year. The good news is that the yield is already higher if you include the hikes that are likely to be announced. The price of the DJIA today should offer what will be closer to a 3% dividend yield in 2012.

The list of the 30 DJIA components is very long, but we have reviewed each and all of the following: Alcoa (NYSE: AA), American Express (NYSE: AXP), AT&T (NYSE: T), Bank of America (NYSE: BAC), Boeing (NYSE: BA), Caterpillar (NYSE: CAT), Chevron (NYSE: CVX), Cisco Systems (NASDAQ: CSCO), Coca-Cola (NYSE: KO), DuPont (NYSE: DD), Exxon Mobil (NYSE: XOM), General Electric (NYSE: GE), Home Depot (NYSE: HD), Hewlett-Packard (NYSE: HPQ), International Business Machines (NYSE: IBM), Intel (NASDAQ: INTC), Johnson & Johnson (NYSE: JNJ), JPMorgan Chase (NYSE: JPM), Kraft Foods (NYSE: KFT), McDonald’s (NYSE: MCD), 3M (NYSE: MMM), Merck & Company (NYSE: MRK), Microsoft (NASDAQ: MSFT), Pfizer (NYSE: PFE), Procter & Gamble (NYSE: PG), Travelers Companies (NYSE: TRV), United Technologies (NYSE: UTX), Verizon Communications (NYSE: VZ), Walmart Stores (NYSE: WMT) and finally Walt Disney (NYSE: DIS).

We have broken out each DJIA component to review the history and expected dividend action individually. While this is a no short read, dividend and income investors better pay close attention here. Value investors should pay attention as well. It is these DJIA components that are often considered as the prize of the sector and many peers are facing the same trends today and tomorrow. Our review focuses on when the last hikes have been seen, when the next dividend hike will come, and what the price and implied upside to the Thomson Reuters consensus price target offers. We also even have shown an expected income payout ratio on each if applicable to further show which companies can boost their payouts ahead.

Alcoa is still hanging its hat on the notion that the aluminum market will double by 2020, so we have to at some point expect the DJIA component to boost its dividends again in the years ahead. Still, the company is trying to accumulate more liquidity and the current climate is a choppy one for metals players. The dividend has been stuck at $0.03 since the first of 2009 and it was $0.17 per quarter before then. Any hikes might only be nominal until the business climate becomes a bit more steady and predictable. The 1.1% is very unimpressive for a DJIA component and we have no great dividend ambitions in the near-term for Alcoa, even if only 10% to 15% of expected 2012 income is slated for payouts. At $10.35, the consensus price target of about $13.25 is well under the 52-week high of $18.47.

American Express has had its dividend steady at $0.18 per quarter since its January 2008 payment and the current yield is only 1.4%. The company’s credit metrics keep improving and its payout is not quite 19% of expected earnings next year. Still, this is a financial stock and it is hard to a financial stock to boost dividends right now. It has no branch bank operations but the climate remains tenuous. At $49.70, the consensus price target is around $55.75 if you trust price targets on financial firms.

AT&T has had four quarters in a row of $0.43 and it has a history of raising its dividend each year. The question that hangs over it is the regulatory block over the T-Mobile buyout and the huge penalty that AT&T will ultimately have to pay out of it cannot clear regulatory hurdles. This is one of the dividend stars with a 5.8% yield but it also pays out more than 70% of its expected income. Another hike is possible, but our take is that the dividend yields are now so high that telecom giants will only ratchet them up slightly. At $29.20, the consensus price target is $31.90.

Bank of America has had its dividend steady at $0.01 dividend since early 2009 and it is not likely to raise its dividend until regulators feel its systemic risk is less or until it gets its mortgage exposure behind it. The company had previously wanted to increase its payout and its request was denied. Price targets on bank stocks are not very trustworthy these days so we will leave this one up to Washington D.C.

Boeing’s dividend has remained the same $0.42 per quarter since its first raise (from $0.40) was paid out in February of 2009. Boeing had been aggressively raising its payout before the recession and its payout more than doubled since 2004. With such a huge investment in the 787 Dreamliner, the 2.5% dividend of today may have to be good enough for a while longer as the company is currently paying out about one-third of expected 2012 earnings. Boeing’s price of $67.72 compares to a consensus target of $80.90 currently.

Caterpillar saw a dividend raise at the July 2011 dividend and its payout was raised before and after the recession. It only has two quarters of $0.46 payouts behind it, so the heavy machinery maker is likely to only offer another hike in mid-2012. The current yield is only 1.9% so it has room to hike significantly if it chooses. The company’s current dividend payout is only about 20% of expected earnings in 2012, but that assumes another year of growth. Shares have bounced handily in recent weeks from the low and the $96.50 price compares to a consensus price target of $113.90.

Chevron raised its dividend each year before, during and after the recession. We are just about at three quarters of $0.78 so a hike could be announced in the first half of 2012. Chevron’s yield today is about 3% and it is paying about 25% of its expected earnings. This one can easily raise its payout and it seems a shoe-in for 2012. At $106.50, the consensus price target is just under $122.00.

Cisco Systems has had three quarters of payouts at the $0.06 dividend level and we look for Cisco to boost its payout in 2012 for its March or July payment after its layoffs and restructuring are further behind it. Business is on the recovery currently and John Chamber hinted at a higher payout initially even if he was about two years late (or longer) to the dividend party. It is after all, a DJIA component, and it keeps spending billions endlessly to buy back its stock. The payout is only about 15% of income, but there is a wide discrepancy here between non-GAAP and the GAAP income that a dividend is often based upon.

Coca-Cola has already had three quarters of a $0.47 payout and it has raised its dividend yearly before, during and after the recession. The beverage giant is increasing its investment into emerging markets as the North American market is peaked. Still, the company has plenty of room to increase its 2.8% dividend yield in the years ahead. The company is still paying out 45% to 50% of its expected earnings ahead.

DuPont is highly cyclical and it has had the same $0.41 per quarter payout since late in 2007. With the economy getting choppy, the payout is less than 40% of its expected income. Maybe the company can hike its payout, but it might wait for an upturn and we have no real conviction here. At $47.95, the consensus price target is $56.58 and the current 3.4% yield might have to just be good enough for now.

Exxon Mobil has just recently paid out its third straight quarter of $0.47 paid out and this one has raised its quarterly payout each year before, during and after the recession. This is Big Oil and the 2.4% dividend can easily be raised whether the company may have to pay out more taxes ahead or not. The company keeps buying back and retiring stock and its payout ratio is about 22% of expected earnings. At $78.85, the consensus target is just shy of $90.00 per share.

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General Electric began its dividend recovery in mid-2010 and it has technically raised its payout three times since mid-2010. The $0.15 payout now compares to a $0.31 payout before Jeff Immelt and crew decided to chop the dividend down by two-thirds so that it could save cash and liquidity during the recession. Our take is that a normalized dividend goal in the new climate is ultimately $0.20 per quarter per share and it is going to take years to recover back up to that $0.28 before the final dividend hike to $0.31 in late-2007. GE’s yield today is 3.7% and its payout is close to 40% of expected income in 2012. The $16.10 price compares to a consensus price target of $20.80.

Home Depot has been raising its dividend despite some serious economic challenges during and long-after the recession. The current payout of $0.25 will have been paid out for four consecutive quarters at the end of November so another hike, if it comes, would come as an announcement in early 2012 if the payout is hiked. The payout here is close to 40% of income and the stock at $38.00 is very close to the consensus price target of $39.80.

Hewlett-Packard is in a state of flux right now and it already raised its payout from $0.08 to $0.12 as the first real dividend hike in years. HP has only two quarters of a higher payout behind it and our take is that the company may only marginally raise its payout under Meg Whitman in 2012 as it gets its house back in order. With shares around $27.50, the stock has bounced handily and the consensus price target is just over $30.60. Making earnings predictions is difficult during a turnaround or restructuring of this size, but HP’s payout is barely 10% of its expected earnings. Room to Raise? Yes! Should it? Maybe.

International Business Machines was a surprise $10 billion (and then some) Buffett holding and Big Blue has just paid out its third quarter of $0.75 in dividends. The company has been aggressive in its payouts and in its buybacks. The Old Man of Omaha believes more dividend hikes are coming this way, which would be welcomed by new buyers since the dividend yield is only 1.6% since the $187 price compares to a 52-week high of $190.53 and since its consensus price target is $195.30. IBM’s current $3.00 annualized payout is barely 20% of the 2012 expected earnings and the company is looking to grow earnings to $20.00 per share by 2015. Buffett thinks higher payouts are on the way whether there will be a new CEO or not.

Intel has been very aggressive in boosting its quarterly payouts to shareholders and if you include the first cycle payout hike in early 2010 after the recession it has already hiked its quarterly payouts three times. Intel pays out about one-third of its expected income. Intel’s most recent price of $25.00 is after Warren Buffett disclosed a large stake and the consensus price target is close to $26.80 on the stock. Even though shares are now within 1% of a 52-week high, Intel still offers a 3.4% dividend yield as of today.

Johnson & Johnson may have had problem after problem in quality control, but the consumer products, drug and medical products maker is almost three-quarters into its $0.57 per quarter in payouts. The current payout ratio is under 44% of expected 2012 earnings and it seems that making acquisitions will have to be bolt-on deals going forward rather than transformative deals. With shares around $64.60, the consensus price target is currently about $72.85 and the current dividend yield is about 3.5%.

JPMorgan Chase is already three straight quarters into its $0.25 payout per quarter after it had to slash its payout to $0.05 after previously having been at $0.38 before the recession peak. It will be years before we see its dividend reach $0.28 again, but this one may easily able to raise its payout compared to peers. Jamie Dimon also has hinted at higher payouts ahead but we still think it will be a gradual raise rather than a return to its old payout instantly. The company’s old pattern was a raise of about 10% to 15% in the past before the recession, and the current payout ratio is still well under 25% of expected income. Do analyst price targets count in banks? Not by our take today.

Kraft Foods is one which has had the same $0.29 per quarter payout since mid-2008. The food giant’s payout now seems to depend on how its restructuring progresses and with that we are taking a pass on making any bold dividend predictions about Kraft. The $1.16 annualized payout on a static basis represents about 45% of expected 2012 earnings before considering any restructuring.

McDonald’s just gave its long-term update to show how intends to keep growing through time in same-store and total sales and in income. The Golden Arches also just boosted its dividend in September by 15% to $0.70 per quarter for an implied dividend yield of right around 3.0%. The $94.00 price compares to a consensus target of nearly $100.40 and its income payout is about 50% of expected income in 2012.

3M Company is soon to be at its fourth consecutive payout of $0.55 per quarter and this conglomerate has raised its payouts before, during and after the recession whether other conglomerates did the same or not. At $81.30, the consensus price target is $90.41 and the $2.20 annualized payout of today is only about 35% of expected 2012 earnings. With a 2.7% yield, we would look for a dividend hike to be incremental rather than massive in the months ahead.

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Merck & Company recently surprised the markets with a dividend hike and it truly was a surprise. Have Big Pharma earnings become predictable enough even with patent expirations coming down the pipe that the payout hikes can finally begin? The 11% payout hike to $0.42 from $0.38 per quarter was the first hike since September of 2004. The new dividend yield is 4.7% and the $35.70 price compares to a consensus price target of $39.85.

Microsoft recently raised its dividend to $0.20 from $0.16 and it should trade ex-dividend any day. While this dividend represented a large boost of 25%, it is actually a far cry from what many investors have been hoping for. With the billions and billions of dollars in the Microsoft arsenal, some are hoping that Microsoft will do a one-time dividend and will increase its payout even higher. With shares trading around $26.50, the new $0.80 per year payout comes out to right over 3% with about a 30% income payout ratio and the consensus price target is $31.70.

Pfizer had already been raising its dividend and the $0.20 per quarter payout in early November was the fourth quarter in a row. The pre-cut dividend in 2009 was $0.32, so another marginal dividend hike of 10% would still be well under its peak dividend of $0.32 per quarter. The yield is close to 4.0% now, which is not too shabby but still under the new implied 4.7% payout of Merck. The $19.80 price compares to a consensus price target of $23.39 and its dividend payout ratio is currently less than 40% of expected income. Another dividend hike here seems likely in the weeks or months ahead, probably to $0.22 per quarter.

Procter & Gamble has been a serial dividend hiker before, during and after the recession as consumer products are supposed to be nearly recession proof. A run into commodity prices and in-store placement cost hikes have failed so far to hurt its dividend raising. Its payout in October of $0.525 was the third consecutive payout of the same rate, so we will be expecting a payout hike announcement early next year for a payout boost to $0.55 to $0.57 for an April payout hike.

Travelers Companies has managed to raise its payout each year before, during and after the recession. That is very surprising for a financial company. The September payout of $0.41 was the second payout at that rate, which leaves one more dividend in December 2011 and one more for March 2012 before it would consider hiking its payout for the June dividend payment. The current yield is about 2.8%. The $57.50 price compares to a consensus target of $61.00, but the payout ratio is very subjective since earnings are lower in 2011 and supposedly growing in 2012.

United Technologies also raised its dividend before, during and after the recession but the conglomerate tends to raise its payout after each five-quarter intervals rather than every four quarters. We are just about at three straight payouts of $0.48 per quarter so we will not be looking for a dividend hike until the summer of 2012. The current yield is 2.4% and the $78.85 price today compares to a consensus price target of $89.67. The current payout ratio is about one-third of expected 2012 income.

Verizon Communications already boosted its payout by more than 2% to $0.50 per quarter for its October payment. That being said, there is a high yield of about 5.3% but we do not look for a dividend hike possibility for about another 11 months. The company is paying out about 80% of its expected 2012 income and its $37.10 price compares to a consensus price target of $38.75.

Walmart is just about to have its fourth payout of $0.365 in December, so we would look for another dividend hike for that March 2012 payout. The last hike was by 15% and at some point the retail giant has to consider a safe payout ratio that balances its share buybacks and its cap-ex plan. The good news is that Walmart does not exactly need buyout capital nor does it need major expansion capital. The current yield of about 2.5% was closer to 3% before the most recent pre-earnings rise. Now shares have pulled back to $57.40 and the pre-earnings target was within a few cents of $60.00.

Walt Disney is unusual in that it pays its dividend out annually rather than quarterly. Annual dividends might not entice investors to hold if they worry that hard times are coming, particularly with what is a paltry 1.1% yield today. The Mouse House is also only paying out close to 15% of its expected 2012 earnings. The last dividend hike was on December 1, 2010 so if a hike comes it should be announced within the coming weeks. The 2010 dividend was raised to $0.40 for an annual payout, but that the payout had been $0.35 for three straight years prior to that. We would like to see a payout raised to about $0.50 but the yield has been low here for some time already.

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JON C. OGG

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