The progress of 2010 so far must be making market skeptics feel vindicated. A pullback that some market participants were calling for has finally surfaced. With strategists like Charles Schwab’s Liz Ann Sonders calling for a year “full of corrections,” there could be more downdraft periods to come.

For instance, many are worried about what will come of the economy when the government stimulus wears off and the Federal Reserve begins to withdraw liquidity from the system. Washington has come back to prominence as a major wild card for the market this year, recently overshadowing much of the fourth-quarter earnings season. Projections for another deficit-filled fiscal year coupled with opaque, loosely proposed regulations for the nation’s largest banks are just two catalysts that have been creating a dark cloud over markets recently.

With uncertainty at the forefront and the possibility of disappointing economic growth ahead, it's important to have dependable income streams from dividend-paying stocks to balance out your portfolio. What’s more, the past surge was led by lower-quality names. As the market moves forward, investors should expect to see an increasing shift toward leadership from quality companies.

Dividends mean stable returns, but they can also signal a company's financial health -- especially in this economy, in which even former steady payers such as General Electric have slashed their payouts. Mature companies that still have more cash than they need, even in this stormy market, are some of the strongest businesses out there.

Investing in stocks such as Cellcom Israel (NYSE:CEL) and Alliance Resource Partners (NASDAQ:ARLP), which yield 9.6% and 7.4%, respectively, can give you a steady return in a volatile market.

How do you find solid companies with strong dividend yields? I've done some of the dirty work for you, with help from The Motley Fool's CAPS screener. To find stocks with hefty dividends, I screened for companies with:

  • A minimum dividend yield of 5%.
  • Market caps of $1 billion or greater.
  • Four- and five-star ratings (out of five) from our 145,000-member CAPS community.

Here's what popped up from my screen:

Company

Current Dividend Yield

Market Cap
(in billions)

CAPS Rating
(out of 5)

Alliance Resource Partners

7.4%

$1.5

*****

Altria Group (NYSE:MO)

6.8%

$41.4

****

Amerigas Partners (NYSE:APU)

6.7%

$2.3

****

AT&T (NYSE:T)

6.4%

$151.2

****

Cellcom Israel

9.6%

$3.1

****

Enerplus Resources (NYSE:ERF)

9.3%

$3.9

*****

DuPont (NYSE:DD)

5.0%

$29.7

****

Data from Motley Fool CAPS.

Dividends are one way to search for quality companies, but it's important to dig deeper and make sure that any individual investment is right for your portfolio. Dividends should -- and the key word here is should -- be accompanied by strong management teams, balance sheets, and cash flows, all of which reflect a strong, properly positioned business with a competitive advantage.

But that's not always the case. Large debt loads, especially coupled with declining operating results, can be red flags that warn of a looming dividend cut. If companies need cash to refinance or put back in their business, they won't keep giving it back to shareholders. Make sure to check for debt levels on the balance sheet, along with revenue and the amount of cash the company is generating from operations. The amount of debt could determine the difference between a dividend diva and a dividend dud.

Also, pay special attention to whether a company's dividend yield goes much above 8% for common stock. If the yield has leaped recently, chances are it's because the stock price has fallen sharply, not because the company raised its dividend.

REITs, which are required to pay out a large portion of their earnings, are an exception to that rule. However, still-tight credit markets mean that rolling heavy debt loads in this environment could be a death sentence for some REITs. Foolish buyers should approach with caution.

The above table is a great place to start your search, but you'll still need to stay up-to-date on the doings of dividend divas. In a market where cash is king, their payouts could still prove fickle. Keep an eye on your favorite stock candidates' fortunes with help from Motley Fool CAPS.

More dividend-paying Foolishness:

Fool contributor Jennifer Schonberger does not own shares of any of the companies mentioned in this article. You can follow her on Twitter. Alliance Resource Partners is a Motley Fool Income Investor recommendation. The Motley Fool has a disclosure policy.