As a group, investors are loving dividends right now. Just look at the attention dividends articles have gotten on the Fool.com website. Dan Dzombak's discussion of his high-yield portfolio is currently the most popular article on the website, but in recent weeks readers have also gone gaga for Brian Richards' crazy-simple dividend strategy and Anand Chokkavelu's warning about sky-high dividend yields.

I have a feeling that this attention to quarterly cash payouts will be a passing fancy. And I wrote exactly that when I called dividends a fad. Of course at the time I was going largely on gut.

But now I've got eggheads backing me up!

The other day I stumbled on a paper that Vahap Uysal and Evgenia Golubeva of the University of Oklahoma wrote last October. The title: "Seeking Safety in Hard Times: Dividends and Insecurity." If you want to get your wonk on, you can grab a copy of the paper from the Social Science Research Network.

In short though, what the authors found is that when investor insecurity is high -- as measured by the University of Michigan's survey of consumers -- investors prefer safe, stable dividend payers. In other words, investors will only stick with dividend payers until they feel good about the economy and their personal financial situation again. At that point, they'll venture out of the perceived safe-haven and forget about how much they loved those quarterly checks.

Say it ain't so!
While I don't like to lock my portfolio into a rigid set of rules -- after all, you have to take value where it presents itself -- I have repeatedly made the case that focusing your investing on dividend stocks that have a significant yield has led to very solid results in the past.

Inspired by the results of Uysal and Golubeva's study, I thought I'd take another look at the returns from dividend stocks to see if dividend investors are making out or missing out.

For the purposes of this exercise, I used only stocks valued at $500 million or more at the beginning of the period and I split the universe into two groups: those that yielded 1% or better (Group 1) and those that yielded less than 1% or paid no dividend at all (Group 2). In keeping with the study, I chose four time periods based on University of Michigan consumer survey data. Two periods (2000 and 2004) were chosen as times where consumers were feeling particularly good, while the other two periods (2003 and 2008) were times when consumers were not happy campers.

Time Period

Average Rate of Return-Group 1

Median Rate of Return-Group 1

Average Rate of Return-Group 2

Median Rate of Return-Group 2

Feb. 2000

11.8%

9.2%

9.7%

1.4%

Mar. 2003

13.5%

10%

13.4%

8.9%

Jan. 2004

9.5%

7%

9%

5.1%

Nov. 2008

24.5%

19.9%

31.2%

23.4%

Source: Capital IQ, a Standard & Poor's company, and author's calculations. Returns represent non-market-weighted annual rate of total returns between start date and 2/15/2011.

This isn't a particularly robust dataset, but the results show dividend stocks holding up fairly well through each of the periods. However, it's clear that they have their biggest edge when confidence is thick in the air and that they have less of an edge, and may even underperform their non-paying (and low-paying) counterparts, when fear takes over.

Things that make you go "hmmm…"
Last week, the U of M announced preliminary results from its February survey and its measure of consumer confidence had risen to 75.1. That's a significant gain from the reading of 55.3 in November of 2008, but it's still well below the 100-plus marks from 2000 and 2004. Heck, it's still below the "low" of 77.6 in 2003.

That would suggest that now may not the most ideal time to be focused on dividend stocks. If the researchers are correct that investors pass up non-dividend payers when confidence is low, then we may be able to find market-beating returns outside of the dividend world by looking for non-dividend stocks that fearful investors are still avoiding.

Or maybe not. The dividend payers gave a good account of themselves in all of the time periods, so sticking with dividends through thick and thin may be a simpler strategy that still achieves attractive returns.

What's clear though is that what you don't want to do is follow the fads. The investors that will be the worst off of all will be those that are letting fear push them into dividends now only to be later wooed into high-growth, non-dividend-paying stocks when consumers and the market have regained confidence.

Beware of the sirens
My personal portfolio is largely dividend payers (though not exclusively) and I plan to keep it that way. It's a mix that includes, on the one hand, companies like AT&T (NYSE: T), Eli Lilly (NYSE: LLY), and Suburban Propane Partners (NYSE: SPH), which have a lower potential for growth, but all yield 5.5% or better. I've augmented those high-yielders with stocks like McDonalds (NYSE: MCD), Wal-Mart (NYSE: WMT), and Intel (Nasdaq: INTC), all of which have lower current yields, but I believe have much more potential for earnings and dividend growth.

My expectation is that we will see continued economic improvement and that will feed through to both market and consumer sentiment. Will I be able to avoid the sirens' sweet song when confidence returns? I'm certainly not above the behavioral tricks that Mr. Market uses to entice investors to do what's against their own self-interest, so I know I'll be challenged over the next few years to not follow the crowd -- at least to some extent -- as they flash the "all clear" sign and once again kick dividends to the curb.

Now I know there are a lot of other dividend fans out there right now. Do you think you'll be able to ignore the greed goblin pulling you toward non-dividend payers when confidence returns? Have any tips on putting plugs in your ears when the sirens sing? Head down to the comments section and share your thoughts.

Want to follow along with the dividend stocks I mentioned above? Add them to your Foolish watchlist!

Intel and Wal-Mart Stores are Motley Fool Inside Value picks. Wal-Mart Stores is a Motley Fool Global Gains recommendation. The Fool owns shares of and has bought calls on Intel. Motley Fool Options has recommended a diagonal call position on Intel. The Fool owns shares of Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Matt Koppenheffer owns shares of AT&T, Eli Lilly, Suburban Propane Partners, McDonalds, Wal-Mart, and Intel. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or on his RSS feed. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.