This time last year, companies were slashing dividends left and right, to the tune of $52 billion in investor income. But after the worst year in Wall Street's history for payouts, dividends staged a comeback in 2010, on improved earnings and stronger cash flow. And analysts expect the upward trend to only continue in 2011.

Speaking on behalf of S&P Indices, analyst Howard Silverblatt predicts that "over half the S&P 500 issues will pay out more in regular cash payments in 2011 than they paid in 2010," despite the continued uncertainty of the economy. And the passage of Obama's tax package also bodes well for dividend-paying stocks.

According to its provisos, dividend income will be taxed at the same rate it has been for more than eight years, maxing out at 15%. Why should this make dividend payers any more attractive? Because if the tax package hadn't passed, dividend income would have been taxed at the same rate as your regular income -- and for many, that would have been a whole lot higher.

But those expecting a dramatic surge in dividend stocks may be in for a disappointment. According to Silverblatt, financial companies are the likeliest to start increasing dividends because they did the most cutting in the first place. However, it may take time to see their dividends reach pre-2008 levels, simply because many of these companies now have more outstanding shares to divide income among.

So how does one go about finding ways to trade the dividend trend? One starting point is to look at dividend trends over the past three years. We're wondering: Which companies managed to raise their dividends despite the recent economic turmoil?

Of course, past performance is no guarantee of future results -- but companies with a track record of raising dividends might offer a good starting point.

Here is a list of stocks that have rallied in 2010. In addition, all of these companies have a solid track record of raising dividend payments -- do they have what it takes to keep up the pace in 2011? You be the judge. (Click here to access free, interactive tools to analyze these ideas.)

Company

Dividend Yield

Performance Over Last Year

Dividend Trends

Horace Mann Educators (NYSE: HMN)

2.45%

45.67%

Dec. 2008 dividend per share at $0.05, Dec. 2009 dividend at $0.08, Dec. 2010 dividend at $0.11

Alliance Holdings (Nasdaq: AHGP)

4.26%

84.29%

Oct. 2008 dividend per share at $0.39, Oct. 2009 dividend at $0.44, Oct. 2010 dividend at $0.50

BCE (NYSE: BCE)

5.13%

38.27%

Dec. 2008 dividend per share at $0.37, Nov. 2009 dividend at $0.41, Nov. 2010 dividend at $0.46

Western Gas Partners (NYSE: WES)

4.95%

65.05%

Oct. 2008 dividend per share at $0.30, Oct. 2009 dividend at $0.32, Oct. 2010 dividend at $0.37

South Jersey Industries (NYSE: SJI)

2.74%

42.06%

Aug. 2008 dividend per share at $0.27, Aug. 2009 dividend at $0.30, Jun. 2010 dividend at $0.33

Genesis Energy (NYSE: GEL)

6.09%

42.18%

Oct. 2008 dividend per share at $0.32, Oct. 2009 dividend at $0.35, Oct. 2010 dividend at $0.39

Alliance Resource Partners (Nasdaq: ARLP)

5.17%

57.63%

Oct. 2008 dividend per share at $0.70, Oct. 2009 dividend at $0.76, Oct. 2010 dividend at $0.83

ConocoPhillips (NYSE: COP)

3.28%

38.25%

Oct. 2008 dividend per share at $0.47, Oct. 2009 dividend at $0.50, Oct. 2010 dividend at $0.55

National Healthcare (NYSE: NHC)

2.40%

35.85%

Dec. 2008 dividend per share at $0.24, Nov. 2009 dividend at $0.26, Nov. 2010 dividend at $0.28

Dividend histories sourced from AOL Money, current dividend yields sourced from Finviz. The list has been sorted by the average increase in quarterly dividend payments.

Interactive Chart: Press Play to compare analyst ratings for all stocks mentioned above.


Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

Alliance Resource Partners and South Jersey Industries are Motley Fool Income Investor selections. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.