Investing: High-Flying Dividends

GROUND YOUR PORTFOLIO WITH STOCKS THAT CARRY HIGH YIELDS. THE STRATEGY WILL PAY OFF OVER TIME

For the past two years, the U.S. stock market has been at a virtual standstill as the Dow Jones industrial average has hovered at around 10,000. Investors are distrustful of corporate earnings reports and skeptical about Wall Street's projections.

So perhaps it's no surprise that stodgy dividend stocks--blue-chip companies with modest but consistent single-digit earnings growth--have returned as an investment of choice. As Frank M. Felicelli, portfolio manager of the Franklin Equity Income fund, puts it, "It's back-to-basics investing."

It's also smart. In a study done last year, fund firm T. Rowe Price compared the return of a $10,000 investment in...

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