5 Must-Own Dividend Stocks for 2013

BALTIMORE ( Stockpickr) -- If you had to pick just five dividend-paying stocks for your portfolio today, what would they be?

With all the emphasis on dividend investing in recent years, more and more investors are adding a yield component to their portfolios. But often, that's easier said than done. With so many dividend-paying names out there, it's hard to figure out where to start. That's why today, we're talking a look at five high-yield must-own dividend stocks for 2013. Think of this list as a starter pack for any new income portfolio.

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First of all, dividends do matter. According to research from Wharton Professor Jeremy Siegel, reinvested dividends account for as much as 97% of total market performance. Better yet, dividends even impact how big your capital gains are. Over the last 36 years, dividend stocks have outperformed the rest of the S&P 500 by 2.5% annually, and they outperformed nonpayers by nearly 8% every year, all while paying out cash to their shareholders, according to data compiled by Ned Davis Research.

An important question is whether five names will provide the diversification you need from an income portfolio? The short answer is yes. The truth is that you don't need to own hundreds of stocks to create a diversified portfolio - in fact, just five names cut around half of the volatility from a single-stock portfolio. Up it to 1,000 positions and volatility only drops another 10% and change. In short, a small portfolio of dividend stocks you have time stay on top of beats a huge, unwieldy portfolio any day.

With that, here's a look at five must-own dividend stocks for 2013.

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