5 Dynamic Dividend Stocks

Ruth. Jordan. Montana. You don't have to be a sports fan to recognize those names, and with good reason. All three of these athletes made magic happen whenever they competed. Even more importantly, when the chips were down, you could still count on these guys to deliver.

In times of economic turmoil, wouldn't it be great to have a performer like that in your portfolio? High-quality dividend payers can be just that kind of day-in and day-out all-star that you're looking for.

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

POSCO (NYSE:PKX), for example, has beaten the S&P 500 by 59 points since April 2005, and it's currently rewarding investors with a 4.4% yield. Or consider Health Care REIT, which has topped the S&P by 53 points since September 2003, atop a current 8.4% 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 130,000-plus members of our CAPS community:

Sources: Capital IQ, a division of Standard & Poor's; Yahoo! Finance; and CAPS as of March 12.
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 start further research. I'll even kick you off with some thoughts on Texas Instruments.

Does my dividend have a glass jaw?
The last thing we want in a dividend payer is the risk that the company will fall off a cliff and pull back its payout. This can be a double whammy: Not only will you lose your dividend payout, but you'll also likely see the price fall, as many of the dividend-loving investors who own the stock run for the hills.

Investors can rest fairly easy regarding Texas Instruments' payout. The company has been paying a dividend for more than a decade, so it has reliability on its side, even if TI hasn't been as steady in increasing that payout. Its dividend has actually represented a very small portion of the company's free cash flow (that is, operating cash flow minus capital expenditures). That gives TI breathing room to keep paying its dividend even if its business takes a hit, and lets TI spend billions in extra cash on share buybacks.

A glance at the balance sheet makes me even more bullish on the company's prospects for continued dividend greatness. At the end of the year, TI had more than $2.5 billion of cash and equivalents on its balance sheet, with not a speck of debt against it.

What the bulls say
While TI may be known by many for its ubiquitous graphing calculators, the company's core strength lies in semiconductors. These chips go into a broad range of growing end markets, including cell phones, high-definition TVs, mobile data connectivity, and biometric security, as well as a number of large, stable markets.

The semiconductor industry as a whole will definitely feel the heat during the recession, but with a large, diverse customer base -- the company claims nearly 80,000 customers for its analog semiconductor products -- and that great-looking balance sheet, TI looks well-positioned to weather the storm.

On CAPS, the stock only has a four-star rating, but it nonetheless commands a bullish following of nearly 1,400 members. CAPS All-Star kristm gave Texas Instruments' stock a thumbs-up back in summer 2007, saying:

TXN has a dominant position in digital projection (DLP is their technology), analog processors, and serious calculators. Plus an appealing low P/E. HP would be in a better position now if it had imitated Texas Instruments instead of [Dell (NASDAQ:DELL)] and Compaq.

Get into the action
You can check out who else has been bullish on these stocks, and 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 Bad News Bears into the Dream Team. And really, could you argue with having the stock equivalents of Michael Jordan, Magic Johnson, and Sir Charles Barkley help your portfolio chalk up wins?

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