Dividends are a key component of investing, accounting for the vast majority of the S&P 500's returns over the past 60 years. Even better, companies that initiated a dividend or raised their payouts to shareholders have not only outperformed the broad market index since 1973, but handily trounced those that kept their dividend policies unchanged -- or worse -- cut or eliminated their payments. And they did so with significantly less volatility.

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Dividends are an investor's hedge against market downturns when stock price appreciation is hard to come by. And when they're reinvested to take advantage of the power of compounding, they can help build wealth over time. That's why it pays for investors to take careful note of companies that have consistently increased their dividend payments over long periods of time.

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Source Fool.com