"Do you know the only thing that gives me pleasure? It's to see my dividends coming in." -- John D. Rockefeller

In one of my previous jobs, I helped manage a group of large individual investment portfolios. Some of those portfolios reached into nine figures.

The biggest investing lesson I took from studying those successful portfolios was this: Buy dividend-paying stocks and, most importantly, buy them early.

See, these portfolios contained long-term winners such as 3M, which, in most cases, had been bought decades before and were now paying out tens of thousands of dollars in annual dividend income.

The owners of the portfolios didn't close their eyes, pick stocks like 3M out of a hat of blue chips, and hope for the best. They took the time to learn about and select companies with sustainable business models and long track records of increasing shareholder value through capital gains and dividend growth.

That extra effort to hand-pick the perfect dividend stocks paid off for them, and they're reminded of their wise decisions every quarter, when their dividend checks roll in.

Your turn to build a dividend dynasty
Not all dividend stocks are created equal, however. Witness the slashed dividends from stocks such as Fifth Third (Nasdaq: FITB), KeyCorp (NYSE: KEY), and even Circuit City recently -- they serve as harsh reminders that dividend payments are not guaranteed. That's why it pays to study the company's earnings quality and payout ratio to make sure it can continue to pay dividends.

Before we get into all of that, however, let's get you a few dividend stocks to research. To get you started, we'll get help from both the 110,000 investors participating in Motley Fool CAPS and the new CAPS stock screener, and find dividend-paying stocks with:

  • Return on equity greater than 10%.
  • A dividend yield greater than 3%.
  • A four- or five-star CAPS rating.

Here are a few of the results:

Company

CAPS Rating
(Out of 5)

Dividend Yield

Companhia Siderurgica Nacional (NYSE: SID)

****

4.50%

DuPont (NYSE: DD)

*****

3.46%

Vector Group (NYSE: VGR)

****

9.04%

VF (NYSE: VFC)

****

3.21%

Data from Motley Fool CAPS and Yahoo! Finance as of June 19.

These stocks are promising, but note: This is not a list of formal recommendations. Instead, use it as a starting point for further research.

What's to like?
When it comes to dividend-paying stocks, investors aren't necessarily interested in high growth, nor should they expect it. What's appealing about dividend stocks is they can provide income and earnings growth -- some might say it's the best of both worlds. Let's see why investors like these four dividend stocks.

Companhia Siderurgica Nacional
CAPS All-Star marc64 may have even surprised himself on this pick. In January, he argued: "Steel is a cornerstone of civilization, and a must for industry. Given the risk/opportunity balance, I expect better than average performance [from SID]." Better than average, huh? Since that pick was made, SID is beating the market by more than 60 percentage points.

DuPont
This 200-year-old stalwart's stock movement is best described using Foghat's 1975 rock classic song "Slow Ride." Since 2000, shares have idly traded between roughly $40 and $50 a share. Nevertheless, in November, CAPS All-Star AndyShea cited three major reasons DuPont shares looked attractive: foreign sales, its soy-based polymer investment, and a "strong annual dividend."

Vector Group
Will cigarette smokers give up their Camels or Altria's (NYSE: MO) Marlboros for cheaper brands? Shanehpdx thinks so and observed: "9% Dividend, annual split 21/20, cheap smokes for those who can't afford their name brand jones any longer."

VF
VF is the home of well-known clothing brands such as The North Face, Wrangler, and Nautica, but CAPS All-Star ddberg thinks there's more to the company than just popular brand names. In December, he cited the company's "solid fundamentals" and a beaten-down stock price and saw a "good opportunity" for a rebound. So far, that has proved to be a wise pick -- VF has since outpaced the market by 11 percentage points.

What do you think about these stocks? Do you disagree with their ratings? CAPS' 110,000 investors are waiting to hear what you think. So sign up today. CAPS is 100% free and guaranteed to educate, amuse, and enrich.

VF is a Motley Fool Income Investor recommendation, and 3M was chosen by Inside Value. Try any of our Foolish newsletter services free for 30 days.

Todd Wenning is dividend-crazy but does not own shares of any company mentioned in this article. The Fool's disclosure policy wallpapered its room with Enron stock certificates.