Although it may seem like a bold statement, Dividend investments are exactly what investors need when other investment types are not performing the way they are normally expected to. Purchasing investments that provide a steady dividend allow several key benefits to investors (three of which we discuss here), so they are extremely flexible in terms of where they could fit in one's investment portfolio. However, flexibility aside, these are the most impressive and important benefits that holding dividend-paying securities can can bring to your portfolio:

1. Income stream. With the huge uncertainty surrounding bond rates, fixed income investments present something of an investment risk. The latest yield curve, for example, points to an expanding economy in the coming year, which means bond rates will start rising. And when rates increase, bond prices decrease. What might seem like a safe and steady investment today could result in poor performance in the coming year, thereby making fixed income investments something that investors need to enter into with extreme caution... and even, then they will need to watch those investments very closely. With dividend-paying stocks you can enjoy above-average yields without the interest rate risk that associated with the fixed income class of securities.

2. Potential for growth. As noted above, when interest rates rise, bond prices tend to fall. This could mean losses in your investment portfolio. However, when interest rates start to rise, it is normally a sign that the economy is trucking along at a healthy pace. This is beneficial for equities, including dividend paying equities. While the yield will go down on dividend paying stocks, the income generated normally does not go down (in fact, when companies enjoy greater revenues, they tend to increase dividends). As well, during periods of growth, stocks tend to increase in value. This means that today's dividend stock will provide decent income and when rates start to increase, they will provide growth benefits as well.

3. The Companies of dividend-paying securities are normally the largest and most healthy. In order for companies to pay dividends on their stocks, they need to be fairly healthy. This provides a certain degree of safety and security for the investor as, unlike small cap companies that can come and go, dividend paying companies are usually large cap, blue-chip companies that have and will continue to weather economic storms. Such companies include Wal-Mart, ConocoPhillips, Caterpillar, and hundreds of others who are among the largest companies in North America as well as the world. This means that price fluctuations are relatively normal for these stocks.

Investors who are looking for safety and who can tolerate the risk associated with equity investments are best to invest in dividend paying stock. Although equities might already be a major component of their investment portfolio, adding to the dividend-paying class will introduce elements of income without having to endure the same interest-rate risk that fixed income securities are subject to, an element of growth potential that all equity assets enjoy, and a reduced capital risk compared to smaller cap funds. The trick in investing in any type of equity, however, remains: and that trick is finding the best stocks!