Hunting the Rare and Elusive Dividend Stock

In the cold light of day, plenty of yesterday's come-hither growth stocks have been revealed as vainglorious floozies. But the stocks that have long held appeal as more conservative, chaste alternatives -- those that pay dividends -- are getting scarce. And companies that do pay dividends tend to offer stingier yields.

The combination of those trends is unwelcome news for investors, because dividends have traditionally helped bolster stock returns, and that's especially valuable in a laggardly stock market.

Though dividends have been a solace to investors in hard times before, companies today are invoking the economy as an excuse to cut their payouts. Standard & Poor's predicts the drop-off in dividend payouts this year will be the steepest since 1942, because so many cash-poor companies have been chopping dividends to save money. For the first six months of 2001, dividends on the S&P 500 index fell 7.1% from the year-earlier level. ...