Stocks delivered nicely in 2009, with the S&P 500 ETF (NYSE:SPY) shooting up an impressive 23.5% and emerging markets were even more impressive. Even bond investors in high yield and junk debt performed admirably throughout the year. The real question now, is what will 2010 hold for investors? As April 2010 approaches, some trends are beginning to take form. Investors are warming up to dividends and stable blue chips once again as they look to stem their risk profiles. And they have good reason to do so.

IN PICTURES: 10 Ways To Prepare For Nature's Worst

History 101

When markets are booming, little to no one pays attention to dividends. Capital gains become cocktail party flavor. After all, talking about insurer Alleghany (NYSE:Y) and $300 a share price tag isn't as exciting as saying you bet the farm on some small cap and won. However, investors should be paying more attention to dividend stocks in the coming years. The markets have history on their sides.

Since 1928, the years following gains of 20% or more in the market have produced similar gains only 6% of the time. History shows that the odds are in favor for more modest returns from stocks, making dividends all that more valuable. (For many reasons, high dividend yields can be dangerous. Find out how in Undesirable Dividends.)

In addition, dividend stocks could be a great contrarian bet. Through 2009, S&P 500 companies paid out $196 billion in cash dividends, nearly $52 billion less than in 2008. Those two-third or so companies in the S&P that did pay those dividends under-performed those stocks that held onto their cash. Including corporations that reinvested dividends, that group booked 21% gains versus 54% gains for non-payers. Dividend payers are still cheap relative to their non-paying twins and that divide maybe shrinking. With the first quarter almost over, 75 companies in the S&P have increased their dividend rates, and more are sure to follow as dividends are a sign confidence in the overall health of the economy.

Adding Those Dividends

If history is correct and the markets produce paltry returns, the following dividend stocks will make great portfolio additions.

Behind such brands as Kleenex, Huggies and Kotex, Kimberly-Clark Corporation (NYSE:KMB) has raised its dividend for 38 years in a row. With its increasing focus on emerging and developing markets abroad, analysts expect the company to earn nearly $4.95 a share in 2010. From a dividend point of view, the company has increased its payout around 9% annually and currently yields a market beating 4.3%. Shares trade at forward P/E of less than 12.

Industrial giant Eaton's (NYSE:ETN) share price was hammered when the auto and truck markets collapsed during the crisis. However, Eaton has begun to move away from its trucking roots and has become a stealth smart grid green pick. The company is also seeing orders increase for its bread and butter equipment things like values, switches and transmissions. Eaton has $4 a share in cash on its books and yields 2.7%.

Plenty of companies manufacture ketchup, but only one sells 650 million bottles of the tomato sauce each year. H.J. Heinz (NYSE:HNZ) is turning those bottles into big sales, especially overseas, growing by over 41% in Asia alone. The growth isn't just in sales; its cash flow sparked upwards of 88% in the last quarter to $439 million. Shares yield a market beating 3.5%.

The Bottom Line

If history is a predictor of the future the general stock market usually follows up great gains with paltry ones. In those kinds of markets, dividend stocks can mean the difference be great returns and sub-par ones. The previous list of dividend achievers along with Sysco (NYSE:SYY) and its 3.5% yield are great ways to prepare a portfolio for a little bit of history repeating. (For more great dividend-paying stock ideas, read 4 Stocks With Smoking-Hot Dividends.)

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