Is anyone else a little relieved by this market sell-off?

Don't get me wrong. The 13-month rally that ended a few weeks back was a welcome respite after the six panic-filled months that began with the Lehman Brothers collapse.

Still, back in April the market appeared to be pricing in a full-on economic recovery that simply wasn't being felt on Main Street, and there weren't many values left to buy. The extended rally felt too good to be true, and it probably was.

And that's ... OK
In an era when instant gratification is the rule, not the exception, it's easy to be surprised when things don't immediately work out the way we'd hoped. The fact that the market has fallen in the past weeks, however, does not imply the American recovery is lost. What, did we really think getting out of our economic problems was going to be that easy?

No, it's still going to be a long and slow recovery. There's much left to be sorted out and repaired before the good times can roll again.

It's all a natural part of the business cycle; during a recession, the deck gets reshuffled and inefficiencies spawned during the boom are corrected. This is already beginning to happen to some degree -- a recent survey done by The Kauffman Group showed that entrepreneurism was at a 14-year high in 2009, higher even than during the dot-com boom. Americans truly are capable of incredible things when times are tough.

It's just going to take some time.

Patience, grasshopper
Meanwhile, we shouldn't be afraid to put money to work when great values present themselves, and today the deals are popping up again.

Dividend-paying stocks are particularly appealing in an anemic market because they provide a real return while you wait for share prices to recover. With that cash in hand, you can buy more shares, put it in the bank, or buy groceries. The choice is yours.

In fact, the recent downturn has provided a number of strong blue chip stocks with well-covered dividend yields over 3%. These opportunities don't come around very often, either -- from 1997 to 2007, for instance, the S&P 500 posted an average yield below 2% -- so when you can snag some higher-yielding bargains in a temporary market downturn, you can set yourself up well for when the market recovers again.

Here are seven dividend-paying blue chips that look particularly attractive right now:

Company

Dividend Yield

Free Cash Flow Payout Ratio
(Dividends Paid / Free Cash Flow)

Interest Coverage
(EBIT / Interest Expense)

Intel (Nasdaq: INTC)

3.1%

29%

NM

McDonald's (NYSE: MCD)

3.3%

55%

14.7

ConocoPhillips (NYSE: COP)

4.4%

80%

8.1

Bristol-Myers Squibb (NYSE: BMY)

5.4%

71%

33.6

AT&T (NYSE: T)

6.9%

59%

6.6

Procter & Gamble (NYSE: PG)

3.2%

36%

16.2

Coca-Cola (NYSE: KO)

3.5%

58%

20.0

*Data provided by Capital IQ as of June 6. EBIT = Earnings before interest and taxes. NM = Not meaningful.

Each of these companies generates more than enough free cash to cover its dividend payouts and has manageable debt expenses. In short, they're good places to start your research.

Foolish bottom line
Despite some encouraging progress relative to where we were two winters ago, the market will remain difficult to navigate as the economy finds its footing and starts gaining real traction. In the meantime, keep a bit of cash ready to pounce on values and focus on generating additional income for your portfolio.

At Motley Fool Pro, we've fortified our $1 million real money portfolio with a number of solid dividend payers like the aforementioned Intel and have been using options strategies like covered calls to produce even more income. If you'd like to learn more about Pro, simply drop your email address into the box below.

Motley Fool Pro analyst Todd Wenning was a Stephen Strasburg cynic, but is now a believer. He owns shares of Procter & Gamble. Intel and Coca-Cola are Motley Fool Inside Value recommendations. Coca-Cola and Procter & Gamble are Income Investor choices. Motley Fool Options has recommended buying calls on Intel. The Fool has created a covered strangle position on Intel, owns shares of Coca-Cola and Procter & Gamble, and has a seriously good disclosure policy.