In , stocks were bought for stability and dividend income. That changed dramatically during the 1980s and 1990s as investors piled into growth stocks, and share buy-backs were favored over paying dividends. After accounting for 50% of the market s total return in the 1970s, dividends contributed only 14% of returns during the technology-fueled 1990s.

Source: S&P, Chicago Board Options Exchange

As we ve pointed out previously, dividends can be a trap. Too often we re attracted to high-dividend stocks for exactly the wrong reason: weak price action. A dropping stock equates to a rising dividend yield, which holds appeal only up to the point when the loss wipes out your income cushion or the dividend itself is cut as was the case with many financial stocks during the downturn.

Broadly viewed however, dividends have a significant impact on return especially when compounded over time. According to data from the CBOE and Bloomberg, $1 invested in the S&P 500 index in 1970 grew to $12.89 by Nov. 30, 2009 based on price alone. With dividends reinvested, the same $1 grew to $45.74.

Even our own recent history provides an example: Since March 1999, the Dow s price appreciation has been 5.7%. When including dividends, that return jumps to 34%.

In today s market, it s hard to ignore the persistently higher prices of two strongly-performing income payers. Electric and natural gas utilities could both benefit from federal infrastructure spending, and utilities such as EQT Corporation (EQT), Black Hills (BKH), Northeast Utilities (NU) and Great Plains Energy (GXP) are all standouts. So are funds that track the sector, such as iShares S&P Global Utilities (JXI) and PowerShares Dynamic Utilities (PUI).

While income is technically interest from bank loans and not corporate dividends, the bank and leveraged-loan funds we originally wrote about in 2003 have come roaring back as investors have regained an appetite for credit risk. Eaton Vance Credit Opportunities Fund (EOE), Van Kampen Senior Income Trust (VVR) and First Trust/Four Corners Senior Floating Rate Income Fund (FCM) all boast strong price action, comparative yields and discounts to their underlying net-asset values.

Lights, Gas and Senior Loans

Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund (MFD) - 3 year

One lesser-followed fund that combines both themes is Macquarie/First Trust Global Infrastructure/Utilities Dividend & Income Fund (MFD), which borrows money to buy a combination of both senior loans (19% of portfolio) and diversified global utilities (70% of portfolio). The fund yields nearly 5% and trades at an attractive 17% discount to its underlying net-asset value.