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.

POSCO, for example, has returned 78% since April 2005, and it's currently rewarding investors with a 3.2% yield. Or consider JPMorgan Chase (NYSE:JPM), which has returned 50% since July 2005, atop a current 3% 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 115,000-plus members of our CAPS community:

Source: Capital IQ, a division of Standard & Poor's; Yahoo! Finance; and CAPS as of Oct. 2.

Any one of these quality companies would add some dividend excellence to your portfolio, but let's take a closer look at why CAPS members think General Electric is worth a hard look.

Sam1005 weighs in
Overall, more than 10,000 CAPS members have logged their opinion on GE, with more than 9,400 of them giving the stock a thumbs-up. This bullish group includes CAPS member sam1005, who recently shared his opinion on the stock:

Its a value buy. Company is being dragged down by the rest of the banking community. Its a pretty diversified company and it'll bounce back as soon as the market gets it act together.

As sam1005 noted in his pitch, if GE is anything, it's diversified. The company sells wind turbines, X-ray machines, and household appliances, and it also brings us great entertainment like 30 Rock through its NBC Universal subsidiary -- just to name a smattering of the many things GE does.

Unfortunately, though, part of GE's diversification is in the financial services industry. Almost 20% of its 2007 revenue came from GE Commercial Finance, which offers loans and leases for major capital assets. Another 15% came from GE Money, a consumer lending business. Late last month, GE announced that its third quarter would take a hit from tough times at GE Capital. At the same time, GE has noted that it has exposure to a range of other financial-services companies through equity and unsecured debt -- a worrisome thought, when we consider what happened to AIG and Lehman Brothers.

So we can definitely expect some tough times for GE in the near term. However, with a solid collection of businesses, a forward P/E of around 11, and a dividend yield greater than 5%, I like the prospects for GE's stock over the longer term -- in fact, I just gave it a thumbs up in CAPS. And I'm not the only one who likes GE right now; Warren Buffett just put $3 billion of Berkshire Hathaway's (NYSE:BRK-A) cash into the company. Granted, he got a sweet deal on preferred stock and warrants, but the fact that Buffett's mantra is "buying great companies at great prices" makes this a pretty strong vote for GE.

Get into the action
You can check out who else has been bullish on these stocks, 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.

More CAPS Foolishness:

• 7 Highly Rated Stocks on Sale
• 5 All-Star Stocks on Fire
• 7 Must-Read Stock Blogs