Barron's Names Five Dividend Stocks with Appreciation Potential (TXN, BDX, BAX, More...)

On a day when the market is experiencing "a correction," wouldn't it be nice to have some insurance in your portfolio without engaging in complex iron condor option strategies?

How about a few dividend stocks that Barron's views as having the extra benefit of growth potential?

According to Barron's, approximately 75% of S&P 500 members increased their dividend payments for Q110, representing a $4.4 billion net increase, and a major shift from the $39 billion decline from the same period last year. They say that the liquid assets of corporate America amounts to about $3.1 trillion, which could make the potential for further dividend hike's closer to reality.

Conditions for Barron's to rank the best dividend stocks include: dividend yields above 1.8%, rising earnings, and a dividend that was less than 60% of operating profit.

In summary, the top five dividend stocks with appreciation potential are:

• Baxter International (NYSE: BAX) is a diversified medical equipment supplier, that could benefit from overseas markets and new products. Click here for a more detailed look at BAX;
  
  
• Texas Instruments (NYSE: TXN) a little low in the payout, with a 1.9% yield. The cash payment to investors has increase fivefold over the last five years. Barron's notes that they have a solid balance sheet, and is in a good position to grow with increased corporate spending and innovation;
  
  
• Becton Dickinson (NYSE: BDX). They make everyday hospital supplies, and earnings have increase through the recession and over the last 11 years;
  
  
• Clorox (NYSE: CLX) is a name familiar with all, and probably graces at least every household in the U.S. The company has raised their dividend every year since 1977. Click here for more on Clorox; and
  
  
• Mattel (NYSE: MAT) is currently riding the resurgence of Barbie, as the stock is up 88% over the last 12-months. They currently have a 3.2% yield, and could see more upside attributed to cost cuts and a better toy lineup.

Barron's notes that dividend players generally gain more at the end of a bull rally.

A senior analyst at S&P predicts a surge in dividend hikes in Q310. However, on Deutsche Bank strategist sees company's focusing more on stock buybacks rather than paying dividends.

And, of course, past performance doesn't guarantee future gains.

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