Can companies afford to keep upping dividends?

USA TODAY markets reporter Matt Krantz answers a different reader question every weekday. To submit a question, e-mail Matt at mkrantz@usatoday.com.

Q: Can companies afford to keep upping dividends?

A: Investors love money for nothing, and dividends are about the closest thing to that dream.

Dividends are getting even better, as companies boost them while corporate profits continue to grow. U.S. companies boosted their dividends 475 times during the third quarter of 2013, up 8.2% from the number of increases in the same period of 2012, says Howard Silverblatt of S&P Dow Jones Indices. Meanwhile, the dividend rate increases amounted to $11.9 billion during the quarter, up 36%.

But while dividends have already been marching higher, they can likely rise further still, Silverblatt says. The number of dividend payers could rise, as some of the 16% of the companies in the Standard & Poor's 500 that aren't paying dividends could theoretically decide to start.

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But more likely, high cash hordes and rising profit going into th

e year will give companies the financial resources to boost dividends again. Actual cash dividend payments in 2013 are expected to exceed 2012's by more than 10%, Silverblatt. And currently, unless there's an unforeseen disruption to corporate profits, 2014 would be another record setting year for dividend payments.

Despite the big jump in dividends, though, the dividend yield has been steady at about 2.6%. That's because stock prices are soaring by an equally impressive amount. Nonetheless, investors are certainly enjoying the wealth effect of dividends and more is likely on the way.