I've been obsessed with dividend-paying stocks since the sixth grade. I'm not sure exactly what inspired me -- it could have been the movie “Wall Street” or the popular T.V. show character Alex P. Keaton (played by Michael J. Fox) -- but one day I came home from school and said I wanted to buy five shares of IBM with my savings.

In 1999, I began working for Jono Steinberg’s Individual Investor Group, where I wrote a regular investment column.

Later, I spent five years at Standard & Poor’s editing the company’s flagship investment newsletter, The Outlook. During that time, I also penned my first finance book, The Standard & Poor’s Guide for the New Investor. It was published by McGraw-Hill in 2003, and translated into Chinese a year later.

These days, I tell investors about my favorite dividend-paying stocks in my monthly newsletter, Dividend Superstars. I also edit Weiss Research's daily e-zine, Money & Markets.

Nobody has to convince me that dividends can create some of the world's most tremendous investment returns. But I love seeing new proof come out.

Enter a new study that was conducted by Ned Davis Research.

The firm found that, since 1972, S&P 500 index members that consistently increased their dividends -- or initiated payouts -- handed shareholders an average yearly total return of 10.4% while non-payers produced a total return of just 8.2%.

Ned Davis Research also demonstrated the power of that 2.2-precentage point difference: By investing $100 in the stocks that raised their dividends in 1972, and investor would have ended up with $3,547 today vs. just $1,745 from the non-payers.

There you have it ... proof positive that dividends make a difference!

I suppose we all saw this coming: Fannie Mae just posted a rather large $2.2 Billion loss for the first quarter, and also announced a dividend cut that will take effect in the third quarter. I can't say I blame FNM for trying to stem the bleeding, but it is never encouraging when a dividend cut hits the tape.

At least I can cling to the fact that none of the companies in the Dividend Superstars portfolio have reduced their payments yet. In fact, many have continue to increase their distributions.

I came across an article on Yahoo Finance this morning, talking about how buyers should approach the current real estate market. In short, it pointed out that buyers have more negotiating power now, and that offers that were once considered "lowballs" are now more likely to get real consideration from sellers. Gee, thanks for the newsflash! 

But my favorite part of the article is this tidbit:

"[Florida realtor] Monsour says she encourages buyers to offer at least 85 percent of the asking price because anything lower than that is 'an insult to the seller.'"

I'm galled every time I'm reminded of how some people -- sellers and realtors alike -- were (and continue to be) so darn sensitive about the market.
 
Don't offer less than 85% of the asking price? Please! I have personally seen some individual asking prices drop 25% to 50% in the last year here in South Florida!

I would never use a realtor who told me how low my offer could be. Instead, I'd move on to a realtor who was willing to present MY offer in the best light possible.

Imagine what the stock market would be like if traders were so ridiculous ... thank goodness they're not!

Just wanted to point out that one of my favorite Asian dividend stocks has been catching fire lately. Huaneng Power is up another 5% today, after posting a 14% one-day gain last Wednesday.

It looks to me like the shares have bottomed out and could easily return to the $40 level, especially on positive news related to coal prices or permission from the Beijing to hike utility prices.

Meanwhile, investors are getting a 5%+ yield from those dividend checks!

Well, now that you've probably filed your 2007 taxes, I want to make absolutely certain that you start planning to reduce how much you pay Uncle Sam in 2008.

One way to do that is by taking advantage of tax-sheltered investment accounts. I profiled four in my recent Money & Markets column. In case you missed that article, click here to get all the details, and learn why dividends are another great way to keep more of your income to yourself!

Look, I don't want to downplay what's happening right now. I'm as mad about the way the government is handling this credit mess as anyone. I hate the fact that savers and investors are seeing lower and lower returns on their investments while greedy real estate speculators and financial bigwigs are getting bailed out at the taxpayer's expense.

However, I also like to keep things in perspective. So depsite the stock market's crazy gyrations, I'm just not that worried. I continue to suggest buying and holding stocks, particularly those that pay dividends. 

In fact, I think dividend investors, especially those of you participating in DRIPs and other dollar-cost averaging strategies, should feel just fine right now.

Consider this study that I originally did for my book, The Standard and Poor's Guide for the New Investor...

Assume for a moment that it was possible to buy an index fund of the Dow back in the 1930s. And pretend that you began investing $100 into that index fund every month, starting on October 31, 1929. You continue this strategy for the next decade.

Well, at the end of 10 years, the Dow is DOWN 46%. That's one of the worst periods for stocks you can possibly imagine. However, over the same time, your overall investment is actually UP 5%!

How can that be? Because you were buying equal dollar amounts throughout the turmoil. And that means you were getting more of the index when it was low, and less when it was high. You were making friends with the volatility!

So, sit back and relax. Keep saving and investing. Plow your dividends into more shares. And see how far ahead you are ten years from now!