Stock dividends assume greater importance - again. It's been more than six years since I've written on the investment validity of considering consistent dividend-paying stocks. We've been through another complete market cycle and when there is a down turn in interest rates, stock dividend yields tend to be appealing.

Dividends are linked to the underlying value of the equities, however, making investors uncomfortable with their volatility, and uncertain as to how to handle these investments on a long-term basis.

Should they stick to buy and hold, or use some other method?

Select blue chip value stocks are also receiving another look, at least those that pay dividends and are cheap relative to their own history. Companies that pay a dividend, as well as increasing a dividend send a very signal to investors.

What is the message? The company has significant free cash flow. You can't pay out, if there is no pay in - once again firmly establishing the difference between company profit and company real cash on hand.

It's not poker yet. There is one investment newsletter and research firm that has a tried and tested proprietary strategy of selecting high-yielding dividend stocks. Investment Quality Trends (IQT), developed by its legendary founder, Geraldine Weiss, in 1966, uses a deceptively simple analogy - the fundamental principle of success in poker (and investing) "know when to hold, and when to fold".

The firm has been practising this simple message successfully for more than 40 years. Investment Quality Trends is still considered one of the best the performing investment letters on a risk-adjusted basis since 1987 with a total return exceeding 12 percent on average per year.

Undervalue-Overvalue Concept. Ms Weiss discovered during many years of analytical observations that when she factored and monitored in some specific company data (see below), the underlying value of the dividends, which determine yield, will in the long run also determine the price of that stock.

The key to value, therefore, lies in yield as reflected by the dividend trend. Individual stock prices fluctuate between repetitive extremes of high dividend yield and low dividend yield. A decline in stock price tends to generate a high dividend yield - these stocks are an Undervalue and a Buy consideration.

Conversely, if dividend yield on the stock has been historically low, and price has risen to historic highs, the upside potential is exhausted and a sale should be implemented before the price declines back to Undervalue and the profits are lost. These recurring extremes of yield establish Undervalue and Overvalue price levels.

How does one find common stocks to build a portfolio using this method? By using Select Blue Chips - IQT tracks approximately 300 stocks that meet the following criteria:

• The company dividend has been raised five times in the last 12 years.

• The company carries a Standard & Poor's Quality ranking in the "A" category.

• It has at least five million shares outstanding; ·At least 80 institutional investors must hold the stock.

• There have been at least 25 years of uninterrupted dividends.

• The earnings have improved in at least seven of the last 12 years.

Each stock's distinctive high and low yield characteristics are then evaluated on an individual basis, with a Dividend in Danger flag raised when it is close to a sell position.

These other indicators are also calculated in the IQT tables: Payout ratio, P/E ratio, Debt and Book Value.

For instance, here is their commentary on McDonalds Corp. (MCD) as of April 2003. "At a recent price of $15, McDonalds is Undervalued (Buy) with a four percent downside risk to its Undervalue price of $14, high dividend yield of 1.6 percent. From current levels, there is approximate 207 percent upside potential to an Overvalue price of $46, low yield of 0.5 percent (Sell). It is a known fact that McDonalds concept has proven itself as one of the most profitable and sustainable businesses in the last half-century. Investors should find ample opportunity to acquire this burger behemoth at exceptional prices."

On Friday, August 8, 2003, McDonalds share price was $23.89. On August 27, 2009, the share price was $57.06 and its dividend yield was 3.5 percent.

IQT (http://www.iqtrends.com/) has been providing timely insightful investment information to US and global banks, insurance companies, mutual funds, brokerage houses and the serious investor who is interested in a long-term portfolio return made up not only of increases in capital, but also stable dividend income.

Ms Weiss, then her successor Kelley Wright, have built a long-term stellar reputation at IQT. The newsletter is not free - but a four-month trial issue costs only $45. If you want to follow the track record of a US capital market innovator and trailblazer for more than 40 years - as the chart of performance demonstrates - it is a very fair price.

Consider in relative terms, if you purchased $10,000 worth of Class A or Class B share mutual funds, it will cost you about $500 in a sales commission (upfront or deferred, but it will cost). With that type of purchase, you may only receive an hour's worth of advice.

DIY. So there you have it, you can do-it-yourself, but note that you will need to open a brokerage account with reasonable trading fees. Start small, invest real time in understanding this process, spend time on the website and researching this process and you will broaden your investment horizons. Good luck!

Martha Harris Myron, CPA, CFP(US) TEP(UK) is a Certified Financial Planner at Patterson Partners Ltd. She provides independent fee-only cross-border tax, estate, investment, retirement, and strategic planning services for Bermuda residents with cross-border and multi-national connections, internationally mobile people and US citizens living abroad. For more information, contact mmyron@patterson-partners.com or phone 296-3528 The article expresses the opinion of the author alone. Under no circumstances is this advice to be taken as a specific individual recommendation to buy or sell investment products or as a promotion for financial plans. The Editor of The Royal Gazette has final right of approval over headlines, content, and length/brevity of article.