Do you remember kicking yourself for not buying a stock when it was cheap, only to watch it move higher? We've all been there. But now's your chance to buy some quality companies at good valuations, and the five names I suggest below all pay dividends, too.

Investors are running for the hills
Just how did these bargains come about? Simple: Many investors are caught up in a blind panic. While that's exactly the best time to buy, remember that investors are running scared for a reason -- sometimes a good one. Below, I highlight three of the largest causes for concern.

The past six or seven weeks have been rough for us investors. The market seems to have sunk inexorably lower, hit by a triple whammy of slowing growth, a bickering Congress, and the end of Quantitative Easing 2.0 -- the Federal Reserve's controversial program of buying assets in order to stimulate the economy.

The end of QE 2.0: The market's move down coincided closely with the Fed's announcement that it wasn't planning a third round of quantitative easing. With investors expecting less liquidity coming into the market to support stock prices, they sold off stocks.

A divided Congress: The 2009 stimulus spending has worn off, leaving Congress fighting over a balanced budget rather than getting the economy back on track in the face of 9% unemployment, which shows no signs of serious improvement.

Slowing growth: With housing continuing to move lower, many consumers are still overwhelmed by debt, leaving them unable to ramp up their own spending. With Congress unwilling to open the purse for more stimulus spending (see Point 2), the market's not seeing the bump in aggregate demand that it wants.

Don't lose hope
Now, those are all reasonable concerns, and they all could continue for much longer. Who knows? But Foolish investors like us know that lower prices mean an opportunity to find bargain-priced stocks. You should be looking for stocks that can thrive in a difficult economy. It's even better if they can do well precisely because of the difficult macro picture, as many stocks below can.

So below, I present five stocks that I think will continue to do well, regardless of the concerns above. The stocks are reasonably priced, offer very attractive dividends, and even give you great downside protection as some investors grow concerned about the rest of 2011.


Dividend Yield


Annaly Capital (NYSE: NLY) 13.5% P/B = 1.17
Wal-Mart (NYSE: WMT) 2.8% P/E = 12.3
Exelon (NYSE: EXC) 5.1% P/E = 11.1
Brookfield Infrastructure Partners (NYSE: BIP) 5.1% P/FFO = 13.4
McDonald's (NYSE: MCD) 3% P/E = 17.3

Source: Capital IQ, a division of Standard & Poor's. P/B = price/book, P/E = price/earnings, P/FFO = price/funds from operations.

Each company offers a solid dividend and the potential for even more in the years ahead.

Annaly can be a great hedge to any portfolio. Now could still be a great time to buy, since the company should fare well as long as the economy is in tough straits. Annaly benefits handsomely from the Fed's near-zero interest rate policy, which allows it to borrow cheaply and buy longer-dated federally supported mortgage-backed securities. I explain Annaly's charms further here, and I added it to my Rising Star portfolio last month. I also own it myself.

If the use of so much leverage – about 600% debt-to-equity -- in Annaly's portfolio is uncomfortable, you might consider Chimera Investment (NYSE: CIM), which is managed by Annaly, uses a similar business model, and pays a similar yield. While Chimera uses less leverage (about 176%), it has to buy riskier mortgages in order to widen its interest rate spread.

Wal-Mart gets no love from the "What have you done for me lately?" crowd. They point to a stagnating stock price but fail to consider the company's dividend, which has grown an average of 15.6% over the last five years. And you know that financial crisis? You'd be hard pressed to find evidence of it in the company's share price. Even better, the company is furiously buying back shares. In less than a year, this giant has purchased $12.9 billion of its own stock, and it just reauthorized the purchase of $15 billion more. That latest allotment would amount to 8% of shares coming off the market. Plus, the company has huge global opportunities in China, India, and Africa.

Exelon offers the safety of a dividend-paying utility. With its stock bottomed out near five-year lows, you're not paying a high multiple, even though you're getting a really attractive dividend and the potential for future upside as the company renegotiates energy prices. The pending $7.9 billion acquisition of Constellation Energy would make Exelon the largest electricity generator in the U.S. If you like a little more spice to your dividends, you might consider National Grid (NYSE: NGG) and its 6.2% yield. This U.K. utility offers international diversification, an inflation hedge, and a growing yield, as I explain here.

Brookfield Infrastructure offers the safety of hard assets and the attractiveness of a meaty and growing dividend. The company owns interests in some of the world's best assets, such as power transmission, coal terminals, and ports. With such high-quality assets, the company can extract rising rents year after year, making it a great and relatively safe play on global development. That's why it's one of our 11 incredible dividend stocks.

McDonald's is like the Wal-Mart of restaurants. And like Wal-Mart, its stock has barely shown any signs of a financial crisis. The company has a rapidly escalating dividend and has committed to pay back all its free cash flow to shareholders as either dividends or buybacks. It's got great growth opportunities in India, China, and elsewhere, and has a slug of hidden assets. (You can find out more about those hidden assets in the special free report below.)

The rest of 2011
While the TV may blather on about a dithering Congress or the Greek crisis, reasonable prices for great stocks make now the right time to act. I think this group of five dividend-paying stocks sets you up well for the rest of the year, come what may. Interested in more dividend stocks? Download a free report from Motley Fool expert analysts called "13 High-Yielding Stocks to Buy Today." Hundreds of thousands have requested access to this report, and today, I invite you to download it at no cost to you. To get instant access to the names of these high yielders, simply click here -- it's free.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.