The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s have 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 the mission of our Motley Fool Income Investor service.

Southern Co. (NYSE:SO), for example, has beaten the S&P 500 by 26 points since November 2003, and is currently rewarding investors with a 5.5% yield. Or consider Magellan Midstream Partners (NYSE:MMP), which has topped the S&P by 23 points since November 2008, atop a current 7.7% 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 140,000-member CAPS community:



CAPS Rating
(out of 5)

Taiwan Semiconductor (NYSE:TSM)



Merck (NYSE:MRK)



General Electric (NYSE:GE)



Yum! Brands (NYSE:YUM)



Toronto-Dominion Bank (NYSE:TD)



Source: Capital IQ (a division of Standard & Poor's), Yahoo! Finance, and CAPS as of Oct. 1.

Any one of these quality companies would add some dividend pizzazz to your portfolio, but let's take a closer look at how Taiwan Semiconductor stacks up.

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 because not only do you lose your dividend payout, but many of the dividend-loving investors who own the stock will run for the hills, causing the stock price to fall.

With that in mind, there are three places I immediately tune into when kicking the tires of a dividend payer -- dividend history, financial statements, and business stability.

Financially, Taiwan Semi is about as strong as can be. At the close of its June-ended quarter, the company had more than $7.5 billion in cash on its balance sheet and carried only a small speck of debt. The business spat out more than $5 billion in cash from operations over the past year, which was more than enough to cover both its capital spending and dividend.

Of course, in a business like semiconductor manufacturing, financial stability is a major boon because of the cyclical nature of the business. Between 2000 and 2001, Taiwan Semi's revenue slid 28% and profit per share plummeted more than 80%. Though it hasn't been quite as bad as the dot-com bust, the past year has seen the company's revenue and profit slashed by 30% and 48%, respectively. So having a rock-solid balance sheet goes a long way toward protecting the company -- and the dividend.

If there is one thing about Taiwan Semi that should give dividend lovers pause, it's the company's dividend history. It began paying a cash dividend only in 2003, which doesn't give us much of a history to go on. Furthermore, between 2006 and 2008, the company's cash payout remained stagnant. And as every dividend investor knows, a happy dividend is a growing dividend.

What the bulls say
But could Taiwan Semi still be a hot-to-trot stock even if its dividend growth isn't ideal? CAPS members seem to think so. Taiwan Semi's stock has grabbed 1,229 outperform calls against just 34 underperforms, giving it a perfect five-star rating.

CAPS member hazelnut283 -- who is ranked in the top 10% of all CAPS members -- has been a believer in Taiwan Semi since early 2007 and offered this pitch:

Taiwan Semiconductor has so many positives... but I'll try and find a place to start. First, the location is in a growing Asian nation, trying to find it's own voice in the world, apart from mainland China. The microchip business is booming and [Taiwan Semi] caters to what is needed for high-tech gadgets like camera cell phones with live-stream TV capabilities and such. And of course, there are the dividend rates of almost 3 %, which is higher than any other stock I own...

While a lot has changed in the world since 2007, the meat of hazelnut's pitch still holds very true.

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.

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:

Magellan Midstream Partners and Southern Co. are Motley Fool Income Investor recommendations. Try any of our Foolish newsletters today, free for 30 days

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned in this article. You can check out the stocks he's keeping an eye on by visiting his CAPS portfolio, or connect with him on Twitter @KoppTheFool. The Fool's disclosure policy pays its dividends in reliability.