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When it comes to the stockmarket, most investors prefer glamour to profits.

Why do I say this? Tell average investors about a company with a cutting-edge technology, an exciting Phase III drug, or a new gold strike and they are all ears. But tell them about a blue chip stock with steady sales, a big order backlog, and a rising dividend yield and they are more likely to stifle a yawn.

That’s unfortunate. Because, contrary to what most investors believe, startling innovation is not a good predictor of business success. Or, as the famous industrialist and steel magnate Andrew Carnegie succinctly put it, “Pioneering don’t pay.”

A young company that is just feeling its oats – and retaining all its earnings – is unlikely to be the best long-term investment. It’s a widely recognized fact that 80 % of new businesses fail in the first five years.

What really makes money for investors over time – and without the hair-raising volatility of hypergrowth stocks – is steady businesses paying regular dividends.

For example, over the past decade, with dividends reinvested, oil producer Chevron Corp has returned 200 %. Altria Group, the U.S. tobacco giant, has returned more than 300 %. Even musty old Con Edison, originally founded asNew York Gas Light Company – a utility that was born 23 years before Thomas Edison – has returned 130 % over the period.

In this excellent new book, my friend, colleague, and fellow analyst Marc Lichtenfeld shows you how and why to invest in great dividend stocks. And let me make two things clear at the outset. Number one, you could not find a more worthy, knowledgeable, or trustworthy guide to the investment landscape. And, second, this investment approach really works.

How can I be sure? Marc runs the Oxford Club’s Perpetual Income Portfolio, a portfolio based solely on growth and income investments. He has done a superb job. In fact, when I looked at the returns recently, I had to ask him, “Holy crap, Marc. How do you do it?”

Fortunately, Marc shows you how you can earn returns like this yourself. He has made me a believer. At investment seminars today, I tell attendees, if you are looking for growth, invest in dividend stocks. If you are looking for income, invest in dividend stocks. If you are looking for safety, invest in dividend stocks.

Why? Earnings may be suspicious due to creative accounting. Revenues can be booked in one year or several years. Capital assets can be sold and the value listed as ordinary income. But cash paid into your account is a sure thing, a litmus test of a company’s true earnings. It’s tangible evidence of a firm’s profitability.

Regular payouts impose fiscal discipline on a company. And history reveals that dividend-paying stocks are both less risky and more profitable than most stocks.

Dr. Jeremy Siegel, a professor of finance at the Wharton School of the University of Pennsylvania, has done a thorough historical investigation of the performance of various asset classes over the last 200 years, including all types of stocks, bonds, cash, and preciousmetals. His conclusion? High-dividend payers have outperformed the market by a wide margin over the long haul.

There is an awful lot of fear and anxiety about the economy andthe stock market today. Investors are understandably confused and uncertain about what to do with their money.

Marc Lichtenfeld has your solution. He demonstrates that even during market declines, dividend-paying stocks hold up better than non-dividend-paying stocks and often fight the broad trend and rise in value. The reason is obvious: These tend to be mature, profitable companies with stable outlooks, plenty of cash, and long-term staying power.

Bear in mind that U.S. companies are sitting on a record amount of cash right now, more than $2 trillion. Companies are not hiring, and they’re not boosting spending. So a lot of this cash is rightfully going back to shareholders. The Dow currently yields more than bonds. And dividend growth among U.S. companies has averaged 10 % per year over the last two years, more than double the long-term dividend growth rate.

The current outlook is especially promising. Over the last 50 years, for instance, the highest 20 % yielding stocks in the Standard & Poor’s 500 returned 14.2 % annually. That’s good enough to double your money every five years – or quadruple it in ten. And if you were even more selective, say investing only in the ten highestyielding stocks of the 100 largest companies in the S&P 500, your annual return would have been even better, 15.7 %.

I should add the standard caveat here about past performance and point out that there are risks with dividend stocks too. As Marc points out, an investor would be foolish to plunk down money for a stock just because the dividend is large. You have to be selective. The market is full of “dividend traps,” troubled companies that pay hefty dividends to keep investors from bailing out.

In the pages that follow, you’ll learn how to avoid those and zero in on potential winners.Marc shows you how to look at cash flow and payout ratios and whether the dividend is sustainable.

Does this require a bit of legwork? Yes, but the payoff is large.

It astonishes me that investors are willing to lend money to the U.S. Treasury for the next ten years at less than 2 %. What a terrible bet, one that virtually guarantees a negative, real (after inflation) return over the next decade.

A far better bet is a diversified portfolio of dividend-paying stocks. Over the eight decades through 2010, dividends contributed 44 % of the U.S. stock market’s return, according to Fidelity Investments. Sometimes it was much more. During the 1970s, for example, dividends generated 71 % of returns.

Marc makes a strong case that dividend stocks today represent a historic opportunity. Not only are U.S. companies flush with cash, but payouts are less than one third of profits, a historic low.

Dividends alone won’t generate a mouth-watering return. But they will rise over time – and surprising things happen when you reinvest them. Picture a snowball rolling down hill.

Albert Einstein understood this. As he observed, money compounding “is the most powerful force in the universe.” And the best way to compound your money? Great companies that pay steady, rising dividends.

This book is your key because Marc Lichtenfeld does a great job of showing you just where to find them.

Alexander Green