5 Dynamic Dividend Stocks

The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s had one crucial element in common: consistent excellence in their organizations and performance. That's a rare accomplishment, but if you think it could never occur in your portfolio, think again. Carefully chosen dividend-paying stocks could be your key to superstar returns.

Build the next investing dynasty
These long-haul outperformers can help you build your fortune, as studies from investing gurus such as Jeremy Siegel have shown time and time again. Finding them is our Motley Fool Income Investor service's mission.

Invesco (NYSE: IVZ), for example, has returned nearly 130% since October 2004, and it is currently rewarding investors with a 2% yield. Or consider Total SA (NYSE: TOT), which has returned 92% since December 2003 atop a current 3.7% yield. While these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.

Identify new talent
With the help of Motley Fool CAPS, we'll search for the best dividend-paying stocks around. Here are several dividend picks that have also earned high ratings from the 98,000-plus members of our CAPS community:

Any one of these quality companies would add some dividend excellence to your portfolio, but I thought I'd kick off further research with a closer look at Inside Value favorite 3M.

Dependable dividends
As we know, not all dividend payers -- or dividend payouts -- are created equal. For that reason, it's important to make sure that the dividend you're expecting isn't about to take an extended vacation with the dodo bird. To figure this out, I like to look at the prospects for the company's business, the company's history of paying dividends, and the sustainability of the current dividend.

With six diversified legs in its business, 3M is to stability what Gary Busey is to volatility (don't tell him I said that, though). It creates products for a variety of different industries based on its novel product technologies, and a number of its brands -- including the 3M brand, as well as Scotch, Post-It, and Thinsulate -- have significant mindshare among consumers. And for those concerned about the U.S. economic slowdown, it's notable that not only are many of its products relatively recession-proof, but the company also derives only 37% of its revenue from the States.

There's no messing around with the dividends at 3M. Not only has the company been paying dividends since the 1970s, but the average annual dividend growth has been roughly 9% over the past five years. The company produces more than enough cash to continue to pay a great dividend and wallpaper its offices with $100 bills at the same time. In fact, over the past few years, cash flow has good enough that it's been supplementing its dividend with billions of dollars in share buybacks.

So not surprisingly, there's a bit of a 3M love affair on CAPS, with the outperform-to-underperform ratio currently at nearly 32-to-1. And some of these bulls think this cash cow is a good bet for its potential for innovation and growth:

CEO George Buckley has been on a mission to kick-start growth. He's loosened the reins on his massive stable of researchers and plans to hike R&D spending to $1.4 billion, or almost 6% of sales. 3M's latest wonder is a mini-projector, the size of a thumbnail, for use with mobile devices. (manvsmonkey)

You can check out who else has been bullish on 3M, as well as chime in with your own thoughts, by heading over to CAPS. You may also want to check out a few of the other top-rated dividend payers above while you're there.

Dividend stocks could help you transform your portfolio from the flash-in-the-pan Florida Marlins into the dependable New York Yankees. And if you hate the Yankees, it's probably because they're so darn good, so darn often.

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