Sizable dividend boosts are an excellent sign for investors for two reasons. First, they suggest as much as any other measure that payments are safe. Companies can and do trim payments, but managers are generally loathe to do so, and few would announce increases if they had reason to believe cuts might become necessary. Second, dividends are more important to total returns than most investors believe. According to a 2002 study published in Financial Analysts Journal, over two centuries ended 2001, U.S. stocks provided an average dividend yield of 4.9%. A $100 investment during that period grew to $2,099, net of inflation, assuming dividends were spent, and $37 million assuming dividends were reinvested.

The three companies below don't have the highest dividend yields among S&P 500 index members, however, they have announced the largest increases, committing to spend 25% to 50% more than they had been.

Cummins

Dividend rate increased 50% to $1.05 a share per year
Yield: 1.5%

Cummins makes engines for trucks, boats and machines, as well as power generators, turbo chargers, fuel systems and other components. The company also serves as a distributor for other companies' products. Sales plunged by one-quarter last year on a global downturn in construction and heavy equipment spending. A recovery is already underway. Sales are expected to increase at a double-digit pace this year and next, and earnings per share over two years ending 2011 are forecast to more than double. Shares sell for 19 times this year's expected earnings, but just 13 times next year's estimate. More than half of the company's sales come from outside the U.S. , and management expects strong sales growth from India, China and Brazil.

National Semiconductor

Dividend rate increased 25% to 40 cents a share per year
Yield: 2.8%

National Semiconductor has relatively few fans on Wall Street. Of the 23 analysts who cover the stock, just seven recommend a purchase. That may help explain why shares sell for less than 11 times forecast earnings despite generally strong financial results of late. The company has reported five consecutive quarters of increased orders, with particular strength in products for power management equipment and mobile devices. Last quarter, its sales jumped 42% from a year earlier, albeit due largely to a recovery from an earlier sales decline. Management has consolidated manufacturing facilities in an effort to bolster profit margins. As a result, although sales for National's fiscal year ending May 2011 are expected to increase by 16%, earnings per share are forecast to rise more than 50%.

Walgreen

Dividend rate increased 27% to 70 cents a share per year
Yield: 2.4%

Branded drugs are typically much more expensive than generic ones, but they're less profitable for retailers. Over the next two years, branded drugs worth about $40 billion in yearly sales are expected to lose patent protection. That should result in a sales decline for drug makers, but healthier profit margins for drug stores, including Walgreen. The company is currently digesting its purchase of New York City druggist Duane Reade, completed in April. Management is looking for $1 billion in yearly cost savings and has already secured about half of it. In June, the company's sales at longstanding stores increased 2% -- a promising sign. Shares sell for 14 times earnings. The recent dividend increase seems unlikely to be Walgreen's last one. The company has boosted payments each year since 1977.