Did you know that a 2% annual increase in a dividend over the course of 20 years will mean nearly 50% more income for your portfolio? Income investors should focus on more than just yields, as regular dividend increases can be crucial to offset the effects of inflation.

Two dividend stocks that could have the potential to significantly raise their payouts in the future are Kroger (KR -1.80%) and Target (TGT 2.45%). And last month, they raised their dividend payments again.

1. Kroger

Kroger is a top grocery company in the U.S. that has been a relatively safe business to invest in amid inflation and recession fears. That's because the company's operations are resilient: Consumers will always need to buy groceries, and Kroger has the flexibility to raise prices to offset rising costs in order to protect its margins.

For the three-month period ending April 30, its sales totaled $45.2 billion and were up 1.3% year over year, while operating profit of just under $1.5 billion was down slightly by 2.3%.

The company's financials are relatively stable, and Kroger is a great dividend investment. Its yield of 2.5% is higher than the S&P 500 average of 1.6%, giving investors some good recurring income to rely on.

Last month, the company announced that it would be raising its quarterly dividend by an impressive 11.5%. Although that amounts to a $0.03 increase from $0.26 to $0.29, it still represents a big hike in the overall payout.

CEO Rodney McMullen said the company's strong and versatile business is why it could afford to make such a generous rate hike: "The strength of our balance sheet provides significant financial flexibility to continue to invest in our business to drive growth."

Kroger's payout ratio is fairly low at just 28% of earnings, making it probable that the company could continue to increase its dividend. With the recent hike, it has now more than doubled its dividend from just five years ago, when it was paying investors $0.14 per share.

Strong financials and consistent dividend growth make this an excellent income investment to hold on to for years. The stock currently trades at a forward price-to-earnings multiple of less than 11, giving investors some great value to go along with the high dividend.

2. Target

Target is a big-box retailer that sells groceries plus many other household goods that consumers use every day. Not all of its products are necessities, but it's still an attractive one-stop shop for people who want to do all their shopping in one place.

For the three-month period ending April 29, sales of $24.9 billion rose by 0.5% from the same period last year. Operating income of $1.3 billion was down by 1.4%. Those aren't strong growth numbers, but they do demonstrate resilience at a time when many businesses are struggling and in much worse situations.

In June, Target announced it would be raising its dividend to $1.10 per share. The $0.02 increase represents a fairly modest 1.9% hike that puts its yield at 3.3%. It also marks the 52nd consecutive year that the Dividend King has boosted its payout.

The current dividend is 72% higher than the $0.64 it was paying investors five years ago. The company made larger increases in recent years as it benefited from a surge in demand during the pandemic.

But even now, as consumers tighten up spending due to inflation, the business has been performing well. Target's payout ratio is around 71%, and while that isn't as low as Kroger's is, it's still sustainable and gives the retail company room to make more hikes.

Trading near its 52-week low and an estimated future earnings multiple of 16, Target could be an attractive addition to your portfolio today.