The dog days of summer are here. Here in my neck of the woods, it’s too hot to do hardly anything.

But the market is showing some signs of life. If it keeps up, the big test for the recent shift in momentum will be when the Federal Reserve meets next week. It’s all but guaranteed that the central bank will opt for another rate increase of three-quarters of a percent. Some economists even think we’ll get a full percentage point.

Of course, my staff and I will monitor these events closely. But in the meantime, it’s time for our monthly search for stocks that are set to put more cash in your pocket.

As Chief Strategist of High-Yield Investing, it’s part of my job. Each month, I flag these stocks first for my premium readers so that they can research them and get a head start. Then, I share them with the public. Ideally, I’m looking for hikes that could happen over the next four to six weeks. I also highlight noteworthy special distributions on the horizon.

We don’t do this just for fun. In a perfect scenario, we find great ideas for consideration in our premium portfolio… Companies posting outsized double-digit increases, and reliable dividend-payers that have been steadily growing payouts for a decade or more.

This month, I have three stocks I’d like to highlight. So if you’re looking for a potential addition to your income portfolio, consider looking at these names further…

3 Upcoming Dividend Hikes

1. Texas Instruments (NYSE: TXN) – Hundreds of companies have raised dividends in each of the past five years. But only a select few have increased their distributions by 200%. TXN is one of them. Last year’s 13% hike lifted the payout to $1.15 per share – triple the $0.38 level from 2016.

Thanks to efficient manufacturing, the analog chipmaker is enormously profitable, turning every dollar of sales into 35-40 cents of free cash flow (FCF). That FCF generation ranks in the 91st percentile, outperforming more than nine out of every 10 U.S. companies. And when it comes to sharing surplus profits, this is one of the most shareholder-friendly companies around.

Management generally aims to return 100% of FCF to stockholders, delivering about 60% via dividends and the rest through diligent share repurchases. The latter has shrunk the outstanding share count by half. And with fewer fingers dipping into the pie, free cash flows have risen even faster on a per share basis.

In turn, dividends have been growing at a 25% compounded annual pace since 2004 – doubling every three years on average.

Cumulatively, Texas Instruments has returned $50 billion to stockholders over the past decade, while plowing billions more into research and development (R&D) to maintain its competitive edge.

While lingering Covid measures in China continue to weigh on demand somewhat, strength in the industrial and automotive sectors is driving healthy global top-line growth. The highly efficient business has churned out more than $9 billion in operating cash flows over the past 12 months, a healthy 27% uptick.

We know where most of that cash is headed.

I suspect TXN will hand out another sizeable double-digit dividend hike in mid-September. While the 3% yield is a bit shy of my portfolio minimum over at High-Yield Investing, this outstanding business will likely continue rewarding investors over the long haul.

2. American Express (NYSE: AXP) – American Express has all the hallmarks of a classic Warren Buffett pick. The business generates buckets of “owner earnings” and enjoys lofty returns on capital thanks to an unbreachable economic moat in an industry protected by tall barriers to entry.

No wonder Berkshire Hathaway owns 152 million shares, a stake whose value has ballooned to $21 billion.

The sub-2% yield is often overlooked by income seekers, but don’t let that fool you. Distributions have been climbing at a solid 9% clip over the past decade. That streak was put on hold due to Covid, but the company made up for it with an impressive 21% hike a few months ago – more than twice the usual size.

American Express added 3 million new cardholders to its membership rolls last quarter, helping fuel a powerful 30% increase in spending volume over the firm’s network. The company processed $350 billion in transactions, spurred in part by small business accounts. The sharpest increase was in the travel and entertainment category, where spending jumped 121% worldwide (before currency fluctuations) to reach pre-pandemic levels.

(Incidentally, that leisure spending bodes well for our stake in EPR Properties (NYSE: EPR), which owns everything from bowling alleys to waterparks.)

American Express has just reaffirmed a bullish full-year outlook calling for 18% to 20% top-line growth and earnings of at least $9.25 per share. The company may re-instate its regular mid-fiscal year dividend hike. Either way, the recent pullback from $199 to $142 has left this attractive Buffett-worthy stock undervalued.

3. McDonald’s (NYSE: MCD) — There’s something to be said for brand loyalty, and the Golden Arches stays packed with devoted customers morning, noon, and night.

The typical location generates about $2.6 million in annual sales – more than double the industry average for quick-serve restaurants. And there are nearly 40,000 locations in 100 countries worldwide. Independent franchisees own 95% of those stores, feeding the parent company a steady, annuity-like stream of cash royalties.

After 45 straight years of dividend hikes, this Dividend Aristocrat is now serving up more than $1 billion in dividends ($1.38 per share) each quarter. And starting next month, that payout will likely be headed upward once again.

System-wide sales have eclipsed pre-Covid levels to reach new highs, thanks in part to selective menu price increases and continued traction from the MyMcDonald’s rewards program. Excluding business interruptions in Russia and Ukraine, earnings have risen 19% from a year ago.

In September, I’m expecting to see a hike to around $1.45 per share, or $2.90 annually.

Action To Take

We’ve had a pretty good run of finding solid ideas from this exercise, so it pays to follow along each month. Some of them end up paying off big time. So if you’re looking for a potential addition to your income portfolio, then I can’t think of a better place to start your research…

But remember, just because I highlight stocks that are likely to increase dividends doesn’t necessarily make them “buys.” These are merely ideas to get you started in the hunt for high yields.

If you want to know about my absolute favorite high-yield picks, you need to check out my latest report…

In it, you’ll find 5 “Bulletproof Buys” that have weathered every dip and crash over the last 20 years and STILL handed out massive gains. And each one of them carry high yields, with dividends that rise each and every year. Go here to check it out now.