Utility shares, for instance, are now trading at a premium to the broad market, which is a rarity. And the price-to-earnings ratio for the average telecommunications stock is 59 percent higher than the P/E for the Standard & Poor’s 500-stock index.

Yet dividend investors aren’t without alternatives. As more and more types of companies return a portion of their profits to shareholders in the form of dividends, there are plenty of sources of income in today’s stock market — and relatively cheap ones at that.

The only catch is that investors must be willing to bet on economically sensitive stocks to capture those payouts. “That’s where we’ve been focusing our attention these days — on nontraditional, overlooked areas that are more exposed to global economic growth,” said David F. Hone, portfolio manager of the William Blair Large Cap Value fund.

A prime example is technology. In the late 1990s, fast-growing tech companies rarely paid dividends, preferring to reinvest their profits toward future growth. Yet in recent years, tech shares have quietly become the second-biggest contributor to S.& P. 500 dividends in dollar terms, just behind the consumer-staples sector.

Tech now accounts for 13.8 percent of all S.& P. 500 payouts, up from less than 6 percent in 2007, before the financial crisis began, according to Standard & Poor’s. In fact, all it would take for tech to become the market’s dividend leader would be for Google to start paying a modest yield, said Howard Silverblatt, senior index analyst at S.& P. Dow Jones Indexes.

Yet because tech dividend yields, expressed as a percentage of stock prices, are not especially high, this sector is still overlooked when it comes to equity income strategies. The average tech yield stands at 1.6 percent, versus 2.3 percent for the broad market.

Even tech stocks with better-than-average yields may be getting short shrift. Mr. Hone noted that Microsoft, for example, had a healthy yield of 2.6 percent. That dividend has grown at a market-beating annual rate of 15 percent over the past five years, yet Microsoft shares trade at a P/E of just 10.1, based on projected earnings.

Kent L. Johnson, co-manager of the Sit Dividend Growth fund, agreed that dividend investors should not overlook tech. Among his fund’s top holdings are I.B.M., Microsoft and Intel. Mr. Johnson noted that Intel, with a dividend yield of 3.2 percent and a projected P/E ratio of just 10.2, “yields twice what 10-year Treasuries do, but it trades at a valuation that’s just two-thirds that of utility stocks.

“Those are the types of opportunities we’re looking for,” he said.

To be sure, Sit Dividend Growth approaches dividend investing in a slightly unconventional way.

Instead of focusing on stocks with the highest yields, “what we’re trying to do is to find growth stocks — companies with strong top-line sales growth, strong cash flow and healthy balance sheets — that happen to pay decent yields,” said Roger J. Sit, another co-manager of the fund.

That has driven the fund both to tech and to other classic growth areas of the market. These include industrial stocks, like those of the farm equipment maker Deere & Company, and health care stocks like Cardinal Health, a pharmaceutical distributor. Both have dividend yields of more than 2.2 percent and trade at valuations of around 10 times projected earnings.

In general, tech, industrial and health care stocks share a couple of attractive traits: earnings of all three grew faster than the broad market in the second quarter. And the average P/E ratio for all three is lower than that of the S.& P. 500.

“You have to fish where the fish are, and for dividend investors that means going to places where there’s enough income for dividends to be paid out today as well as tomorrow,” said Mark R. Freeman, chief investment officer at the Westwood Holdings Group, an asset management firm. But, Mr. Freeman said, you also have to fish in areas that are hospitable to value-minded investors. After all, investors aren’t simply buying income; they are also buying the underlying stock.

If investors are gravitating toward frothy areas like utilities because they crave stability, he added, they should consider shares of industry-leading companies with strong balance sheets in places like tech, industrials and health care. . . . 

(Investment manager) added that dividends were just one element of total returns, and that “investors should look at a number of different dimensions.” These include earnings and fundamental factors, including valuations.

If they do that, he said, they’ll realize that many of the best opportunities for dividends are found in the fastest-growing areas of the market."

Summing Up

Dividend yields on many solid  blue chip stocks are greater than those on ten year government bonds today.

In fact, tech, industrials and health care are areas which should provide share appreciation in addition to growth in inflation adjusted cash dividends over time. Thus, the individual investor doesn't have to limit investments to such areas as telecommunications, utilities or consumer staples (Pepsi, Coke and Wal-Mart, for examples) to get a strong and growing cash dividend yield. Stock appreciation opportunities abound as well.

Individuals may wish to consider Exxon in energy and some high quality banks such as Wells Fargo, J.P. Morgan and U.S.Bank. And perhaps even a couple of consumer discretionary stocks like McDonald's and Whirlpool.

There are lots of ways these days for individual investors to receive substantial cash dividends, await future dividend increases and look to stock price appreciation as well.

Finally, always be patient and then try to buy from Mr. Market at "discount prices" the stocks you intend to own for the long haul. There's no hurry.

As in sandlot baseball, there's plenty of time to wait for the market to serve up the right pitch.

Thanks. Bob.