Scorers like Adam Morrison and J.J. Redick are going to get plenty of attention over the next few weeks, and deservedly so. But I'm always just as impressed with strong point guards and players who can consistently find the open man. That's partly how Syracuse pulled off its surprising win in the Big East Tournament, and judging by the parts of last night's game that I saw, it was also their downfall in the first round of the NCAA tournament.

Teams that pass the ball well and are unselfish are always more dangerous than teams that rely on one or two scorers to carry the day. Longtime basketball fans know this. And it's the same story in investing. Companies that earn fantastic gains over a period of a few years are wonderful. But companies that pay dividends give our portfolios an advantage because they generally increase those payouts over time, and we can reinvest that cash for even greater returns. The best performances come from the portfolios that blend passers and scorers.

Six companies with solid passing games
TJX (NYSE:TJX) is a great example of why the dividend assist works. Today, TJX has a relatively small payout of $0.24 per share for a yield of 0.9%. Investing $10,000 in TJX now means you can expect to receive $90. Not such a big deal, but TJX has been rapidly increasing its dividend, and its payout ratio is only 12.8% of its free cash flow. Assuming TJX continues to raise its dividend by 8% a year for the next five years, you would receive $122 in dividends in year five and a total of $528 over those five years. That's real money that can be put to work in TJX shares or in other companies.

When I'm looking to add to my own portfolio of point guards, I regularly screen for companies that have strong yields, a history of paying dividends, and the financial strength to continue those payments.

Below are six companies I found by running a screen for compound annual dividend growth of more than 8% over 10 years, a dividend yield greater than 2%, and earnings before interest and taxes of at least three times interest expense -- to eliminate companies that might have trouble funding their debt. The query returned 31 companies, including five pharmaceuticals. The list below shows the breadth of industries and company sizes that are able to pay substantial dividends over time.


Dividend CAGR


Altria (NYSE:MO)



Pfizer (NYSE:PFE)



Masco (NYSE:MAS)



Craftmade International (NASDAQ:CRFT)



Avon Products (NYSE:AVP)



Sherwin-Williams (NYSE:SHW)



Data provided by Capital IQ, a division of S&P.

Foolish final thoughts
Dividends aren't flashy and quite often they're ignored altogether. However, over years, dividends allow investors to rack up larger gains -- just like those assists quietly allow Adam Morrison to rack up nearly 30 points per game. If the TJX example above were carried out for another five years -- for a total of 10 -- an investor would receive more than $1,200 in dividends and I believe capital gains as well. It's a strategy that requires a bit of patience, but once those larger dividend payments start rolling in, the effect on a portfolio is tremendous.

Chief Motley Fool Income Investor analyst Mathew Emmert also has a thing for dividends. Each month, Mathew scours the market in search of companies that have attractive valuations and yields greater than 3% with opportunity to grow for years. His Alltel pick has beat the market by 22 percentage points with a total return of 39%. But Alltel is just one of more than 30 Income Investor recommendations that have beat the market. If you'd like to see this month's two selections, which were just released yesterday, click here for a free trial. With the trial, you'll also get access to detailed updates on each company and our dedicated Income Investor discussion boards.

Nathan Parmelee has no financial interest in any of the companies mentioned. Pfizer is a Motley Fool Inside Value selection. The Motley Fool has an ironcladdisclosure policy.