Rob Carrick, Globe Investor

Get out of cash and buy some. Many dividend-paying companies have actually increased the amount of cash they pay each quarter.

Wake up, investors, and smell the dividends.

Okay, you can't smell dividends. But you can certainly touch them as they flow into your RRSP, TFSA or unregistered investment account every three months.

Of course, you have to actually own dividend-paying stocks to get dividends, and that's a problem. Unsettled by sharp stock market ups and down, investors have parked billions of dollars in safe havens like savings accounts and bond and money market funds.

There are plenty of dividend stocks paying 3 to 5 per cent, just as there are plenty of money market funds paying 0.1 per cent, and plenty of savings accounts paying no more than 1 per cent. If you're hooked on safety, you're smothering your portfolio with caution.

But you're nervous about stocks, right? It's natural, even sensible. While investors tried to find their equilibrium after the horror of 2008, the Canadian stock market surged 33 per cent. Then stocks weakened in early 2010, prompting dire warnings about how a bad January often presages a down year. Now, it's February and stocks are doing all right again.

"From last spring to the present, the level of anxiety has gone way down, but the level of uncertainty hasn't changed much," said Bob Gorman, chief portfolio strategist for TD Waterhouse.

Mr. Gorman's suggestion on how to deal with this uncertainty: Take a look at blue-chip dividend stocks like Shaw Communications, Rogers Communications, Shoppers Drug Mart and Power Corp. of Canada.

Is there a risk of losing money in these stocks? Yes, but consider Mr. Gorman's analysis. First, he said that many solid dividend-payers were also-rans in a rally last year that favoured smaller, riskier companies. This means dividend stocks aren't expensive, which in turn suggests they're less vulnerable to a sharp decline in price.

It's also worth noting that the risk of dividend reductions has eased. We did see some companies cut their dividends as a result of the global financial crisis - like Manulife Financial - but business conditions are improving along with the economy.

A second point made by Mr. Gorman is that dividend-paying stocks offer higher yields than bonds. "Historically, bond yields greatly exceed dividend yields," Mr. Gorman said. "But that's not the case right now."

The dividend payers mentioned just above have an average yield of about 3.5 per cent, which compares with 2.5 per cent for a five-year Government of Canada bond. Mr. Gorman said a 3.5-per-cent dividend yield is equivalent to getting roughly 4.5 per cent from a bond, if you factor in the benefit of the dividend tax credit in non-registered accounts.

It's natural to wonder how much juice can be left in the stock market after last year's rally. Mr. Gorman said TD Waterhouse expects high single-digit returns from the Canadian market this year. "But let's suppose that doesn't happen," he said. "With dividend stocks, you're getting paid to wait."