When the recession's official end was called back in June 2009, hopes were high that the economy would bounce back at a rollicking pace, as it had in the past. But here we are, past the recovery's 18-month mark, and economic growth remains painfully slow.

What this means for the market is anyone's guess -- some are projecting wild swings from inflation to deflationary periods, and even a return to the gold standard as we settle into a "new normal." So it's not a bad idea to brace yourself for what could be a bumpy ride -- and dividend paying stocks could be a good way to hedge your bets.

Right now, companies are sitting on stockpiles of cash they've been saving since the crisis hit -- and increased dividend payouts are expected to be among their 2011 expenditures, an added bonus in addition to several perks they have over non-dividend payers.

For one, they offer a steady stream of income to shareholders that could come in handy in turbulent times. They also tend to be relatively stable in comparison to the market at large, curbing investors' potential downside. And investors who opt to reinvest also get the benefit of compounding, whereby a holding's interest is added to the principal -- meaning the interest itself earns interest.

And dividend-paying stocks have historically outperformed non-payers by a pretty substantial margin, making them a pretty attractive investment for the buy-and-holder.

But not all dividend stocks are created equal -- it's important to make sure you're getting a good value, especially if you plan on hanging onto these stocks for a while.

One easy way to locate undervalued stocks is to see what the smart money is up to. Institutions have teams of analysts scouring financial statements, sifting through charts and diligently reading the news surrounding their investments. So when they start snapping up these stocks, you may want to sit up and take notice.

To create this list, we started from a pool of about 100 dividend champions, a list of companies that have paid out increasingly higher dividends for 25 consecutive years or more. We then narrowed down the list by focusing only on the stocks seeing institutional inflows over the last three months. (Click here to access free, interactive tools to analyze these ideas.)

Institutional data sourced from Reuters. The list has been sorted by the change in institutional ownership over the last three months.


Dividend Yield

Institutional Trends

Nucor (NYSE: NUE)


Institutional investors currently own 248,899,710 shares vs. 239,129,680 shares held three months ago (+4.09% change)

Questar (NYSE: STR)


Institutional investors currently own 139,440,619 shares vs. 136,609,738 shares held three months ago (+2.07% change)

Universal (NYSE: UVV)


Institutional investors currently own 22,246,216 shares vs. 21,814,502 shares held three months ago (+1.98% change)

Black Hills (NYSE: BKH)


Institutional investors currently own 26,414,795 shares vs. 25,960,775 shares held three months ago (+1.75% change)

Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned above. Analyst ratings sourced from Zacks Investment Research. Note: The numbers on top of items represent the forward P/E ratio, if available.

Kapitall's Eben Esterhuizen and Alicia Sellitti do not own shares of any companies mentioned.

Nucor is a Motley Fool Stock Advisor recommendation. The Fool owns shares of Nucor. 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. The Motley Fool has a disclosure policy.