Morgan Stanley's European Equity Strategy team recently published a note highlighting dividends' massive contribution to long-term stock returns. Arguing that dividends will only become more important in the next few years, the analysts compiled a list of high-dividend stocks with sustainable payouts. While the report focused on European markets, it's easy enough to verify that the arguments apply equally to U.S. stocks. In this market, U.S. investors should focus on stocks that generate income.

To implement a dividend-oriented investing strategy, you must identify genuinely sustainable payouts at the very least. If they can grow, that's even better. This is no easy task; even Morgan Stanley admits that this criterion is "somewhat subjective." Judging a dividend's sustainability requires a mix of quantitative and qualitative analysis, which requires judgment, experience, and time.

Source: Motley Fool


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