Income-hungry bond investors have long known the drill: Generally speaking, the bigger the payout, the wobblier the security. Which only stands to reason, right? If a company that's received low marks from credit-rating agencies such as Moody's and Standard & Poor's expects investors to buy chunks of its debt, they realize that those investors have to be properly incentivized in the form of a higher yield or -- as the bond geeks like to say -- a fatter coupon.

Risk vs. reward
Why take on the additional risk, after all, without the additional reward? You can always climb up the credit-rating ladder and find sturdier fare.

In the wonderful world of equities, however, the reverse is often true: Plenty of generous dividend payers can be found among the healthiest of companies, which essentially means that you can get paid to invest in some of the market's steadier eddies.

Make no mistake: You'll still have to do your due-diligence homework, and that, alas, is no small feat. A quick screen uncovers more than 250 large caps whose dividend yields for the 12 months that ended with December are higher than the S&P's. What's more, that lengthy further-research list covers a wide swath of the market, including the buttoned-down likes of Anheuser-Busch (NYSE:BUD), BP (NYSE:BP), Campbell Soup (NYSE:CPB), and Coca-Cola (NYSE:KO), as well as relatively racier fare such as Taiwan Semiconductor (NYSE:TSM), Verizon (NYSE:VZ), and Vodafone (NYSE:VOD).

Winnow the list
Which way to go? Well, Fool dividend guru Mathew Emmert looks for:

  1. Real estate investment trusts (REITs) with a funds from operations (FFO) payout ratio below 85%.
  2. Higher-growth common stocks that pay out less than 50% of free cash flow (FCF).
  3. Banks that pay out less than 60% of FCF.
  4. Regulated utilities that pay out less than 80% of FCF.

Mathew is particularly excited when he finds a cash machine trading at a discount to its intrinsic value. This way, investors earn both dividends and capital gains on their way to market-beating returns.

Mathew has been cherry-picking ace dividend payers since the August 2003 debut of his Motley Fool Income Investor newsletter. Mathew's overall list of recommendations has bested the market since his service's inception and his lineup boasts an average yield of roughly 4.6%.

To find out more about the cream of the market's dividend-paying crop, take a risk-free test drive of Income Investor. Your trial provides access to the newsletter's complete recommendations list, its back issues, and the service's discussion boards -- and it won't cost you a dime. In the unlikely event that you find the service isn't for you, just say so within 30 days.

Shannon Zimmerman is the lead analyst for the Fool's Champion Funds newsletter service and doesn't own any of the companies mentioned. Anheuser-Busch, Coca-Cola, and Vodafone are Motley Fool Inside Value recommendations. Moody's is a Motley Fool Stock Advisor recommendation. The Fool has a strictdisclosure policy.