The Cato Corporation ( CATO ) is a beguiling option for investors seeking both growth and income. This specialty retailer of fashion apparels and accessories raised its dividend, following which the shares rose 1.3% to close at $25.99.

Cato recently declared a quarterly dividend of 5 cents a share, which will be paid on Mar 25, 2013 to stockholders of record as of Mar 11, 2013. Last year in December, the company paid a special dividend of $1.00 and also paid an equivalent dividend for 2013 in anticipation of an increase in the tax rate. At that time, the company also revealed its intention of hiking its dividend payout.

The current quarterly dividend of 5 cents or 20 cents on an annualized basis when combined with the dividend of $1.00 for 2013 paid last year reflects a 20% jump from the regular dividend paid in the preceding year.

Other companies, which recently increased dividend, include Family Dollar Stores Inc. ( FDO - Analyst Report ) , by 23.8% to 26 cents, The McGraw-Hill Companies, Inc. ( ) by 9.8% to 28 cents, and BB&T Corporation ( BBT - Analyst Report ) by 15% to 23 cents.

Last month, Cato posted disappointing comparable-store sales results for the month of January. On a 5-week comparable basis, the company’s sales for January declined 9%, while comps plunged 12% year over year. Consequently, the company lowered its earnings guidance for the fourth quarter and fiscal 2012.

Management now expects earnings between 27 cents and 29 cents for the fourth quarter and in the range of $2.11 to $2.13 for fiscal 2012. These are down from the company’s earlier projection of earnings of 34 cents –36 cents for the fourth quarter and in the band of $2.17 –$2.19. The current Zacks Consensus Estimates for the fourth quarter and fiscal 2012 are 28 cents and $2.18, respectively.