SAN FRANCISCO (MarketWatch) — Investors this week will divide their time watching for dividend hikes that are popular in February while taking the pulse of the U.S. consumer from companies such as Coca-Cola Co., Wal-Mart Stores Inc. and Priceline.com, Inc.

Stocks finished higher across the board Friday, notching their best week of the year after consumer sentiment topped expectations by coming in unchanged for February, and industrial production in January declined on account of bad weather. The Dow Jones Industrial Average DJIA, -0.87% and the S&P 500 Index SPX, -1.11% both gained 2.3%, while the Nasdaq Composite Index COMP, -1.07% advanced 2.9%.

With about four-fifths of the S&P 500 having reported earnings this season, attention in the President’s Day-shortened week will shift to how companies are translating increased earnings into higher dividends, which are on track to beat 2013’s record cash payout, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

“There were 78 dividend increases in the S&P 500 in February of last year,” said Silverblatt. “We have 28 so far this February, so I bet we beat that as it’s only going to get busier and busier.”

Late Thursday saw a jump in dividend hikes and buyback authorization increases, while earlier in the day, PepsiCo. PEP, -1.29% also hiked its dividend and said it expects to increase buybacks. Even with weak demand seen in emerging markets, Cisco Systems Inc. CSCO, -1.38% hiked its dividend last week.

In fact, Silverblatt said he sees a record dividend payout in 2014 of $339 billion from S&P 500 companies, topping 2013’s $312 billion, a far cry from when cash paid out totalled $196 billion in 2009.

But while the total amount paid out is on the increase, the percentage of earnings going into dividends is actually on the decline, Silverblatt notes. Dividend payments are about 36% of earnings right now, down from a 78-year average of 52%, and that’s expected to fall to 34% by the end of 2014, according to Silverblatt.

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Stock buybacks for the fourth quarter, while running flat from the third quarter’s $128.2 billion, are still on track to be significantly up on the year-ago quarter’s $99.2 billion, he noted. Then again, given the S&P 500’s 30% rise in 2013, that appears to be just keeping up with valuations.

Meanwhile, U.S. corporations are still sitting on a record amount of cash, an estimated $1.25 trillion on the books at the end of the third quarter. Even with cash payouts and buybacks on the rise, Silverblatt expects that to increase by 3.7% for the fourth quarter.

Consumer-driven earnings ahead

About 40 S&P 500 companies report quarterly results this week, with a quarter representing consumer discretionary and consumer staples stocks.

So far this year, excluding energy and telecom, the consumer discretionary and consumer staples sectors have performed the worst with declines of 2.5% and 3%, respectively. The S&P 500, in contrast, is down 0.5% year-to-date.

As to whether the consumer contribution to the economic recovery is slipping, much of the recent data shows conflicts, and investors will have to keep an eye on what pans out in the next month or two.

Consumer discretionary and consumer staples companies are some of the hardest pressed to top Wall Street expectations for earnings.

Only 55% of consumer staples companies reporting and 62% of consumer discretionary companies have topped earnings estimates, compared with the 66% average for the S&P 500, according to Thomson Reuters data.

It gets worse on the revenue side of things. With an average 64% of companies on the S&P 500 topping Wall Street revenue expectations, 51% of consumer discretionary companies have topped estimates and only 33% of consumer staples companies have beat on top-line forecasts.

Two Dow industrial components report this week with Coca-Cola KO, -0.19% on Tuesday, and Wal-Mart WMT, -1.02% — which recently warned on profits, blaming weather and food-stamp reductions — reporting on Thursday.

Other notable earnings reports include Medtronic Inc. MDT, -0.19% and Herbalife Ltd. HLF, -2.16% on Tuesday; Marriott International Inc. MAR, -4.33% , Safeway Inc. US:SWY, and Tesla Motors Inc. TSLA, +4.42% on Wednesday; and Hewlett-Packard Co. HPQ, -0.99% , Groupon Inc. GRPN, +2.59% , Nordstrom Inc. JWN, -3.07% , Priceline.com Inc. US:PCLN , and Express Scripts Holding Co. US:ESRX on Thursday.

Economic data in the holiday-shortened week that may lend some insight into consumer health includes the home builder’s index on Tuesday, housing starts on Wednesday, the consumer price index on Thursday, and existing home sales on Friday.

Also, the Federal Reserve is scheduled to release minutes of its recent Federal Open Market Committee meeting, where the central bank reduced asset purchases by another $10 billion a month, on Wednesday.