The past year was the worst in decades for dividends. Even so, it wasn t horrible.

Payments for companies in the S&P 500 index shrank 17% from their peak. Compare that with share prices, which fell about 60% from top to bottom; earnings, which briefly turned negative; and share repurchases, which all but disappeared. Also, much of the dividend damage was confined to giant banks with outsized influence on S&P 500 returns, including dividends. Beyond banks, more companies increased or initiated payments than trimmed or eliminated them.

For yield hunters, times are challenging mainly because of share prices, not payments. A market run-up has shrunk the S&P 500 s yield to a paltry 1.9% less than half the historic yield for U.S. stocks. However, plenty of companies have announced payment increases in recent weeks, so the index s indicated yield for 2010 is a touch higher, at about 2%. Below are three S&P 500 members that announced dividend increases this month, and whose indicated yields top 2%.

Wal-Mart

Dividend increase (annual rate): from $1.09 to $1.21
Yield: 2.2%

Wal-Mart (WMT) is colossal. The firm's yearly sales are five times those of Costco (COST), six times those of Target (TGT) and 23 times those of JC Penney (JCP) . Morningstar Equity Research projects that in 10 years Wal-Mart stores will cover an area the size of Boston. Of course, with such size comes slowing growth. Even though Wal-Mart benefitted last year from customers trading down to discount stores during an economic contraction, its sales increased just 1%. This year, with early signs suggesting the economy is healing, Wal-Mart s sales are forecast to rise 5%. However, earnings per share are expected to increase by closer to 9%, thanks in part to stock repurchases. Last year, the company spent 73% more on its stock than on dividend payments.

Air Products

Dividend increase: from $1.80 to $1.96
Yield: 2.6%

Every breath humans draw holds profit potential. Nitrogen is useful for freezing food; oxygen is a must for hospitals and fish farms; and hydrogen allows oil refiners to turn crude into useful fuels. Air Products & Chemicals (APD) sells these and other gasses and the equipment companies need to produce gasses on-site. Steady demand from the medical, food and energy businesses helps to reduce the company s economic sensitivity, and rising energy needs in emerging economies bode well for growing gas sales. In the near term, a hostile takeover of rival could prove expensive; bankers and lawyers might cost Air Products 2 to 3 cents in per-share earnings each month the fight drags on, reckons one analyst. However, the new dividend rate seems affordable, costing about 40% of profits.

PepsiCo

Dividend increase: from $1.80 to $1.92
Yield: 2.7%

PepsiCo (PEP) has thus far lost the war for cola dominance to Coca-Cola (KO), and yet it brings in about two-thirds more in yearly sales than its rival. That s because Pepsi is mostly a snacks company. Brands like Doritos and Lay's give the company a 39% share of the U.S. market for salty snacks (and a 23% share in Europe), along with a valuable distribution network. Like Coca-Cola, PepsiCo recently bought its bottlers. That should allow the company to reduce overlapping distribution costs and keep a closer watch on what's happening at stores, but also adds exposure to rising commodity costs. The recent dividend increase comes as little surprise. PepsiCo is a Dividend Aristocrat Standard and Poor s designation for those members of its 500 index that have boosted payments in each of the past 25 years.