5 Dynamic Dividend Stocks

Ruth … Jordan … Montana. They all made magic happen whenever they competed. When the chips were down, you could count on these guys to deliver.

In times of economic turmoil, wouldn't it be great to have a performer like them in your portfolio? Well, high-quality dividend payers can be just the kind of day-in and day-out all-star you seek.

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 repeatedly shown. At the same time, they can provide a solid defense against crazy market conditions. Finding them is the mission of our Motley Fool Income Investor service.

ONEOK Partners, for example, has beaten the S&P 500 by 39 points since November 2005, and it currently is rewarding investors with a 5.4% yield. Or consider Snap-on, which has topped the S&P by 49 points since October 2004, atop a current 3.4% 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 125,000-plus members of our CAPS community:

Sources: Capital IQ, a division of Standard & Poor's, Yahoo! Finance, and CAPS as of Jan. 15.
All yields listed are trailing and may not reflect recent corporate actions. 

If you like what you see, but want more, you can run this screen for yourself with CAPS' handy screener. While these are not formal recommendations, they're a great place to kick off further research and potentially add some dividend excellence to your portfolio. I'll even kick you off with some thoughts on Taiwan Semiconductor.

Does my dividend have a glass jaw?
The last thing we want in a dividend-paying company is the risk that the company will fall off a cliff and have to pull back its dividend. This usually ends up being a double whammy; not only do you lose your dividend payout, but many of the dividend-loving investors who own the stock will also run for the hills, causing the stock price to fall.

Taiwan Semiconductor is hardly what you'd call a veteran dividend payer, as it's only paid a common dividend since 2004. In normal times, I'd probably say that this makes the loss of the dividend a pretty big risk, but we're living in anything but "normal times." Dividends are disappearing left and right, and even the payouts of longtime dividend payers like Bank of America (NYSE:BAC) and Citigroup (NYSE:C) are looking about as safe as any mission led by Jack Bauer.

That's not to say that Taiwan Semiconductor's dividend is rock solid, particularly given the historical volatility of the semiconductor industry. In fact, investors should already be prepared for the company's results to take a dip, since it reduced fourth-quarter sales and earnings guidance back in December, and its monthly sales reports have been painful.

However, the company has had a good record of producing free cash flow since the early decade's tech blow-up, and that has helped it to build up a cash-rich balance sheet that I'm sure Bank of America or Citi would love to have right about now. And as a leader in its industry, Taiwan Semiconductor should be able to weather the cyclical downturn better than smaller and less-established competitors.

What the bulls say
You don't have to look too far on CAPS to find a Taiwan Semiconductor bull: 97% of the 1,167 CAPS members who have weighed in on the stock have given it a thumbs-up.

Back in October, CAPS All-Star akilahkt gave the stock the nod, despite the uncertainty about chip sales for the coming year, noting:

Chip foundries require intense capitalization, a need that favors larger companies over smaller ones. This means TSM's size gives it an advantage over other non-US chip makers both in terms of scale advantages and technology investments. So if you are buying chip stocks, TSM is the choice.

More recently, fellow All-Star DarkToast contributed a green thumb and offered:

This company is the most likely to pick up all of [AMD's] business (whats left of it) as AMD exits manufacturing and turns to contract manufacturers. High dividend, oversold, good potential for long term earnings. Well off 52 week high.

Get into the action
You can check out who else has been bullish -- and bearish -- on these stocks, as well as chime in with your own thoughts, by heading over to CAPS.

Dividend stocks could help you transform your portfolio from the Bad News Bears to the Dream Team. And really, could you argue with having Michael Jordan, Magic Johnson, and Sir Charles Barkley help your portfolio chalk up wins?

More CAPS Foolishness:

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• 125,000 Investors Help You Beat the Market  

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