Over the long haul, two factors matter more than any others in determining how much return you'll see from the stocks you buy:

  • How fast the underlying companies grow.
  • How much income those businesses hand out to their owners.

Unfortunately, the real economy is currently hovering somewhere between shrinking and stagnating. As a result, many companies' growth plans are taking a backseat to their mere survival. While the recent market run might be an indication that the worst of the collapse could be over, there are no real signs of a rapid recovery.

Indeed, Nouriel Roubini, the "Doctor Doom" economist who correctly forecast this mess in the first place, is forecasting a sluggish recovery at best, a double-dip recession at the worst.

You can still get returns
Although real growth may be on the sidelines for the time being, bullet point number two can still drive your portfolio upward.

Indeed, historically, around 44% of total investment returns in the S&P 500 have come from dividends. Even in more usual times, that's a huge chunk of cash. In these times, when real growth is constrained, those payments become even more important.

In addition to the obvious benefits of receiving the cash in your pocket, a well-supported dividend sends an overall message of strength. When that payment grows -- even amid an economy called the worst since the Great Depression -- it's a very strong signal about the company's long-term prospects. Just take a look at how these companies have weathered this storm:


Recent Yield

Recent Dividend Growth

Payout Ratio

Net Income
(in Millions)

Cash From Operations
(in Millions)

Microsoft (NASDAQ:MSFT)






Wal-Mart (NYSE:WMT)






PepsiCo (NYSE:PEP)






United Technologies (NYSE:UTX)












Praxair (NYSE:PX)






Automatic Data Processing (NYSE:ADP)






Their dividends are:

  • Well supported by earnings (a payout ratio below 67% indicates the company has cash to reinvest in its business as well as reward its shareholders).
  • Protected by substantial operating cash flows (which are even stronger than their earnings).
  • Moving in the right direction (upward).

Get paid to wait
They may not be the highest-yielding companies in the market, but their payments still do provide a great starting point for returns amid a stagnant overall economy. Even more important, though, those payments project tremendous potential growth once the real economy does recover.

At Motley Fool Income Investor, we love owning companies with strong, supportable dividends. The cash in our pockets today is helping us invest through the worst economy in a generation, and the earnings power behind that cash serves as a platform for future successes. In more usual times, those seemingly small payments still represent more than 40% of an investor's long-run returns. These days, they may well represent the only real returns any of us will see.

To get started owning those companies best positioned to reward you today and be leaders of the recovery tomorrow, join us today. If you'd rather see exactly how we use those payments to pick stronger investments that reward you both today and tomorrow, simply click here to start your 30-day free trial.

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At the time of publication, Fool contributor Chuck Saletta owned shares of Microsoft. Automatic Data Processing and PepsiCo are Motley Fool Income Investor selections. 3M, Microsoft, and Wal-Mart are Inside Value selections. The Fool has a disclosure policy.