Perks is clearly aware of research which shows that, in the latter part of an economic recovery, dividend-paying stocks outperform non-dividend-paying stocks and that in general it is wise to make even conservative investment portfolios equity-heavy at this stage in the cycle.

Ed Clissold, a global equity strategist at Ned Davis Research, has found that, in the US market, companies which resumed dividend payments or increased them in the period from January 31, 1972 to February 28, 2011, offered an average return on investment of 9.7 per cent a year. Indeed, all dividend-paying stocks were offering returns of 9 per cent whereas companies that had cut or eliminated dividends were returning 7.5 per cent and non-dividend stocks returned an unimpressive 1.9 per cent per year.

In case there is some feeling that recent history is somehow aberrant and that over the longer term the case for dividend-paying stocks is questionable, research undertaken for Credit Suisse by Elroy Dimson, Paul Marsh and Roy Staunton of the London Business School shows that, looking at over a century of investing from 1900 to last year, dividend-paying stocks consistently outperform others.

Moreover, their study is global so this is not a single-market phenomenon. In the US, dividend-paying stocks have risen on average by 5 per cent per year in this period - and remember that this period includes the massive stock market depression which stretched from 1929 until after the second world war. It is not just a question of paying dividends but paying higher dividends because, as this study shows, it is the high-yielding stocks that outperform the low yielders.

What all this means is that cautious investors stand to benefit from dividend income growth alongside the capital growth derived from share price increases, whereas in the case of bonds, commonly seen as an alternative for cautious investors, the dividend income is consistently lower than that of shares and capital growth is virtually non-existent.

A small caveat needs to be entered here because part of these rate-of-return calculations include the value of shares distributed in lieu of cash dividends. Generally speaking, companies are more generous with scrip than cash and so it seems to be a no-brainer to take the shares and forgo the cash.

However, and this especially applies to smaller investors, taking scrip usually means that the shareholder will end up with partial lots of shares which are subsequently hard to sell and generally can only be sold at a discount. So taking scrip in lieu of cash requires careful consideration.

For the most part, buying good dividend-paying shares is a no-brainer. Yet some of the best companies do not pay dividends as a matter of policy. Warren Buffett's Berkshire Hathaway is probably the most famous non-dividend-payer because Buffett takes the view that his investors should be putting money into the company and not taking it out. He believes that the time for investors to take their money is when they quit the company altogether and sell the shares. His investors accept this because they believe that he will put their money to good use, better use indeed than they could themselves.

However, not all companies are run by Buffett or the supergeeks at Google who also do not believe in paying dividends. Investors therefore expect profits to be distributed, at least to some extent.

As a former SmarTone investor, I was impressed by the high level of dividend payments but could not help feeling that a high-growth telecommunications counter probably needed to retain more of its earnings to remain competitive. For this reason I sold the stock as soon as it reached a pre-set target. It is now trading on a demanding price-to-earnings ratio exceeding 40 times while the yield remains at the high end of 4 per cent.

This reminds us that, while most investors focus on price-earnings ratios to determine the value of a share, there is less emphasis on yields - although this, too, is a good indication of share value.

The reason for the discrepancy is understandable because comparing the price of a share with its earnings is a factual exercise whereas the level of dividend payment is discretionary. Some company boards are very reluctant to pay out a large proportion of their profits and, in so doing, keep yield levels low, but this does not necessarily mean either that the shares are a bargain or that the company is performing badly.

In Hong Kong, companies tend to be cautious in making high dividend payments. The accompanying table shows that the highest current dividend among Hong Kong blue chips is 5 per cent, offered by Esprit. Hang Seng Bank, a consistently good performer, comes next with a dividend exceeding 4 per cent. But in Hong Kong, dividends are more likely to be in the region of 2 to 3 per cent. Even at this level, they remain comfortably above most bank interest and bond yield rates.

Dividend payments are rising in the United States and it's a fair bet that the same will happen here. The good news is that in Hong Kong, unlike the US, no tax is levied on dividend payments, which makes them more valuable here.

One of the great mysteries of the Hong Kong market is that some of the highest and the very lowest yields are to be found in mainland stocks. At the high end, this is probably explained by rather reckless income distribution and the low end reflects a simple lack of profitability. Whatever the correct explanation for this phenomenon, it adds to the scepticism of those of us who find it hard to value mainland shares and remain concerned about transparency issues.

In general, however, now is the time to be unfashionable and start looking seriously at dividends before yields start rising again and bargains have left the store.

Win-win

Dividend-paying shares can outperform ones that do not, researchers say

In one US study, the average return on non-dividend stocks was 1.9 per cent, while dividend-paying stock returned: 9%