But while dividends are important, they aren't a magical elixir. Last year, many notable dividend payers crashed and burned. (Lehman Brothers and Bear Stearns both paid dividends.) Your focus, then, shouldn't just be on the payouts themselves, but on the payouts in combination with strong free cash flow generation and sturdy balance sheets.

Is the worst yet to come?
The market has been rocky for nearly 18 months now. Redemption calls have forced hedge funds and mutual funds into selling. And as I mentioned at the outset, too many executives -- like the insiders at Eagle Materials (NYSE: EXP) and GSI Commerce (Nasdaq: GSIC) -- have bet on margin. In other words, stocks will remain volatile.

That's why dividends, with their predictable quarterly cash payouts, make so much sense right now. Yet even dividends won't exempt you from the market's short-term craziness, where hedge fund selling can send stocks down, or where a CEO's margin bet can go very, very wrong.

So don't settle for just any dividend payer; cuddle instead with the Dividend Achievers. These firms boast a demonstrated history of outstanding financial stewardship.

How to be a Fool for dividends
A volatile market gives investors like us two choices: flee to cash, or take refuge in strong dividend stocks. Choose cash if you must, but before you do, remember that reinvested dividends from top firms fueled 97% of the market's return from 1871 to 2003.

James Early, advisor for our Motley Fool Income Investor service, is a dividend die-hard. And with good reason; his service's dividend stock recommendations are beating the market, and they boast an average yield of more than 5%. Care to learn more? Click here for a 30-day free trial. You'll get unfettered access to all of the team's research, and James' picks for the best dividend stocks for new money now.

This article was first published March 29, 2009. It has been updated.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Chesapeake Energy is an Inside Value pick. The Motley Fool's disclosure policy is 100% of your daily dose of disclosure.