Coach (NYSE: COH), the company best known for its pricey leather handbags and wallets, started paying a dividend for the first time a year ago. The announcement was made right after the company reported its fiscal third-quarter earnings results and with Coach's next earnings report due out on April 20th, the company may be poised to ratchet its payout higher.

According to analysis performed by Bloomberg News, Coach may raise its quarterly dividend by 13% or more in the near-term. Coach's current annual common dividend is just 30 cents a share and the shares yield 0.70%.

To be sure, Coach is the epitome of a consumer discretionary stock and the company's savvy management team probably wouldn't consider raising its dividend unless it felt comfortable with its outlook for the rest of the year.

To its credit, Coach is a prodigious generator of free cash. The company more than doubled its cash equivalents to $1.1 billion for the quarter that ended Dec. 26, 2009 from $424.2 million a year earlier, Bloomberg reported.

That cash hoard more than covered Coach's dividend expenses of $94.3 million in the past year. Coach has also show a penchant for repurchasing shares, so it would not be surprising to see the company announce a new buyback plan along with a higher dividend.