Don't Time the Market. Do This.

When you look backwards, it's trivially easy to find stocks that you should have bought or sold based on large moves those shares later made. You can even concoct a plausible story about having seen the big move coming before it happened.

The problem is that in the real world, there's no such thing as an investing do-over. "Might have beens" make good war stories, but they don't do a thing for your net worth.

The most time-tested and reliably successful investing strategies over the long haul are the ones that focus on the company behind a stock, rather than the stock itself. After all, a share of stock is ultimately nothing more than a partial ownership claim on a company. As a shareholder, the business' success is your success -- at least as much of it as you happen to own.

It takes significantly longer than hoping to capture a quick run for massive profits, but it's also something you can figure out -- and trust over the long term.

Find businesses that reward their owners
One of the easiest things you can look for in your investments is how well a company rewards its owners -- you and your fellow shareholders. The company doesn't control the share price, but it does control its profit-sharing, namely dividends.

Paid out of the business' earnings, a dividend gives you real cash in return for your investment. On top of that direct reward, dividends also help verify that the company is legitimately making the money it's claiming in its financial statements. After all, if the cash isn't there, the dividend can't be paid.

And since you're looking at a long term investment, not just any dividend will do. From a long term perspective, the best dividends are ones that adequately reward shareholders while still:

• Being covered based on the company's cash flows,
• Being sustainable during a temporary blip based on the business' balance sheet, and
• Protecting the company's flexibility by not consuming too large a fraction of its earnings.

Companies that currently meet all three of those criteria include the following:

*Free cash flow is defined in this case as cash from operations, less capital expenditures.

With dividend payments below 70% of free cash flow, they are able to generate the cold, hard cash needed to make their dividend payments. Likewise, with enough cash and equivalents to cover a half year's worth of near-term balance sheet obligations, those dividends aren't at risk of being cut due to short term concerns. And with payout ratios below two-thirds of earnings, they maintain enough financial flexibility to grow their business, even while rewarding shareholders.

Heads you win, tails you don't lose
From an investor's perspective, the best part may be that with a solidly financed, stable, dividend paying company, you'll make money no matter what the market does to its stock in the short run. So long as the company remains fundamentally strong, there's no real reason for it to stop paying dividends to its owners. Over the long haul you should see the rewards as the company grows and profits over time, and in the short term, you'll still get paid to wait for that eventual growth.

That's what we do at Motley Fool Income Investor. Our focus on finding solid companies that offer the tangible rewards of ownership has helped our members make money even in this choppy market. To get started, click here to launch your 30-day free trial. There's no obligation.

At the time of publication, Fool contributor Chuck Saletta owned shares of Johnson & Johnson. Johnson & Johnson and Coca-Cola are Motley Fool Income Investor recommendations. Coca-Cola and 3M are Inside Valueselections. Hasbro is a Stock Advisor pick. Motley Fool Options has recommended a buy calls position on Johnson & Johnson. The Fool owns shares of Hasbro and has a disclosure policy.