Dividend stocks have long been the cornerstone of income-focused portfolios, offering investors a slice of corporate profits on a regular basis. Already in 2024, the best dividend-paying companies have announced plans to not only sustain their payouts, but raise them - signaling confidence in their financial health and future earnings prospects. Amidst a backdrop of increasingly volatile markets, here's a closer look at two standout dividend stocks that have caught the attention of income investors by raising their payouts. 

Costco (COST), the membership-based retail giant, has raised its dividend by nearly 14% following a year of rising sales. Similarly, TJX Companies (TJX), the parent company of clearance stores like T.J. Maxx and Marshalls, has continued its decades-long streak of dividend hikes.

What makes these companies worth considering in the current market environment? Keep reading for a closer look at their earnings prospects, cash flow, and what Wall Street is forecasting next from these dividend leaders.

Dividend Stock #1: Costco Wholesale

Costco Wholesale Corporation (COST) has made a name for itself as a go-to destination for savvy shoppers and businesses alike, thanks to its winning combination of bulk deals and members-only perks. But there's more to this retail giant than just great prices and oversized shopping carts.

When it comes to rewarding shareholders, Costco's dividend game is strong. The company has been consistently paying out dividends since way back in 2004, and they've just announced a hefty 13.7% increase in their quarterly dividend. We're talking a jump from $1.02 to $1.16 per share. That's a pretty sweet deal, especially considering Costco's average annual dividend growth of 12.8% over the past five years. 

Longer term, COST has 19 years of consecutive dividend growth under its belt, setting the stage for future Dividend Aristocrat status. The stock yields 0.65% at current levels - which might not seem like much, but the retailer occasionally pays out special dividends, too. Plus, the low payout ratio of around 30% suggests the dividend payouts are very sustainable, and there's plenty of room for future growth without sacrificing reinvestment in the business.

Costco stock has outperformed over the past year, up 46% over the last 52 weeks to comfortably outpace a return of 21.9% for the broader S&P 500 Index ($SPX) over this same time frame. Year-to-date, COST is up 8.9%.

And Costco isn't resting on its laurels. The company has big plans for expansion, with around 20 new stores set to open in the U.S. as part of a larger 28-store rollout. Plus, they're branching out via a new partnership with Sesame to offer a weight-loss program, complete with GLP-1 drug options. Talk about diversifying!

As for the financials, Costco's fiscal second-quarter earnings for 2024 arrived at $3.92 per share, beating the Street's bottom-line expectations even as revenue fell short. COST wrapped up the quarter with a cash balance of over $9 billion. Looking ahead, analysts are targeting EPS growth of 7.8% for the full fiscal year, followed by 9.7% bottom-line expansion in fiscal 2025.

Analysts are all about Costco, which has a consensus “strong buy” rating. Out of 29 analysts, 19 are shouting "strong buy," 3 are giving a more modest "moderate buy" nod, and 7 are saying "hold." The average target price of $774.74 suggests a potential upside of around 7.8% from Monday's close.

Dividend Stock #2: TJX Companies

TJX Companies (TJX), known for its popular discount retail stores like T.J. Maxx, Marshalls, and HomeGoods, has built a solid reputation by offering high-end designer brands at wallet-friendly prices. This approach has not only won over a dedicated customer base, but also cemented TJX's footprint in the retail world.

On the dividend front, TJX is on similarly solid footing. The company recently upped its quarterly dividend by 13%, bringing it to $0.375 per share. This boost marks the 27th increase in the past 28 years, as TJX briefly paused dividend payments at the onset of COVID-19 in 2020 before restarting them again. 

The retailer's updated dividend rate now stands at an annualized payout of $1.50 per share, yielding 1.31% based on the current stock price. With a payout ratio of 33.17%, TJX strikes a healthy balance between distributing profits to shareholders and reinvesting in its growth.

TJX has also earmarked up to $2.5 billion for a share buyback plan in fiscal 2025, further signaling its dedication to enhancing shareholder value.

On the charts, TJX has notched a respectable 20% rise over the last year, though it's nearly unchanged on a YTD basis.

In its late February earnings report for Q4 of 2024, TJX beat bottom-line and top-line estimates, with EPS of $1.22 and revenue of $16.41 billion both surpassing consensus estimates. TJX also reported better-than-expected comparable store sales growth of 5% as profit margins expanded, painting a thriving picture of the retailer. The retailer's cash position was north of $5.6 billion at the end of the quarter, up sequentially and year-over-year.

Looking ahead, analysts are forecasting full-year EPS growth of 8.2% for fiscal year 2024, followed by 9.3% bottom-line growth in fiscal 2025.

Analyst sentiment towards TJX is overwhelmingly positive, with a “strong buy” consensus. Out of 24 analysts, 20 are advocating a “strong buy,” while 4 recommend a “hold.” The average target price of $109.80 suggests a promising 17.5% upside from current levels.

The Bottom Line on Dividend Stocks

So, if you're on the hunt for dividend stocks that are not just holding their ground but raising the bar in 2024, Costco and TJX are two well-positioned retailers to keep on your radar. With their solid track records, strategic moves, and commitment to shareholder returns, these companies are showing that even in fluctuating markets, there are opportunities to build a strong and diversified income portfolio.