In the last few years, BAE (LSE: BA) has struggled to improve its financial performance. That’s largely been because of cutbacks in defence spending across the developed world, with austerity causing demand for the company’s products to come under pressure.

Despite this, BAE has been able to increase dividends in each of the last five years and with them due to rise by 2.6% next year, it trades on a forward yield of 4.5%. This is a higher yield than the wider index and shows that BAE remains a top quality income stock at the present time.

In addition, BAE pays out just 56% of profit as a dividend and this indicates that there’s scope for a brisk rise in shareholder payouts. Furthermore, with US defence spending likely to rise and austerity being eased off across the developed world, demand for BAE’s products could increase and allow it to raise dividends at a rate much higher than inflation.

Defensive option

Another stock offering upbeat dividend prospects is Pennon (LSE: PNN). The water services company currently yields 4.1% and with dividends due to increase by over 6% next year, many investors could be attracted to an inflation-busting rise in shareholder payouts and this could push Pennon’s share price higher.

Also having the potential to act as a positive catalyst on Pennon’s valuation is further uncertainty among investors. With the potential for Brexit as well as uncertainty regarding US interest rate rises and the US Presidential election, investors may decide to adopt a more risk-off attitude and buy perceived safer assets. With Pennon having a highly defensive business model, it offers consistency and reliability to a much greater extent than most of its index peers.

As well as this, Pennon also has a beta of just 0.7. This indicates that it will offer a less volatile shareholder experience in the short run, which is likely to be of interest to more risk averse income-seeking investors.

Power player

Meanwhile, Unilever (LSE: ULVR) may not have a particularly stunning yield, but its dividend growth prospects remain very encouraging. In fact, Unilever has a yield of just 3.2%, but with it relying on emerging markets for the majority of its sales it seems to be well-positioned to benefit from rising wealth and increasing demand for consumer goods over the coming years.

As well as growth potential, Unilever also offers a robust financial outlook since it has a wide range of brands in its product stable. This should provide it with a significant amount of resilience even during challenging economic periods and may mean that the chances of a dividend cut or slow dividend growth are reduced. Furthermore, with Unilever expected to grow its bottom line by 8% next year, investor sentiment could improve and push the company’s share price higher.

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Peter Stephens owns shares of BAE Systems, Pennon Group, and Unilever. The Motley Fool UK owns shares of and has recommended Unilever. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.