Investors are drawn to dividend-paying stocks because, historically, they have supplied secure returns over time. Investor's Business Daily (IBD) has also found, however, that in addition to valuing dividends, investors choose stocks on the basis of earnings and sales. IBD used these factors to develop a composite rating system to formulate its picks for the top-10 dividend paying stocks of 2006, with several REITs making a showing.

IBD rated Highland Hospitality (NYSE: HIH) with its 5.3 percent dividend yield this year's best dividend-paying stock. Also included in the order of their ranking were Highwoods Properties (NYSE: HIW), Reckson Associates Realty Corp. (NYSE:RA) and FelCor Lodging Trust (NYSE: FCH).

The IBD Composite Rating is a summary rating combining earnings per share, relative price strength and return on equity. All of the top-10 dividend paying stocks selected with the system have a stock price greater than $10 with an average daily volume greater than 200,000 shares.

10 Top-Rated Stocks with the Highest Dividend Yield (REITs in bold)
Rank	Stock	Yield	Composite Rating
1	Highland Hospitality (HIH)	5.3%	91
2	Highwoods Properties (HIW)	4.6%	93
3	CenterPoint Energy (CNP)	4.4%	92
4	Hawaiian Electric Industries (HE)	4.3%	90
5	U.S. Bancorp (HBC)	4.1%	94
6	HSBC Holdings (HBC)	4.1%	92
7	Reckson Associates Realty Corp. (RA)	3.9%	97
8	FelCor Lodging Trust (FCH)	3.6%	92
9	Cleco Corp. (CNL)	3.6%	96
10	OGE Energy (OGE)	3.5%	99
Source: Investor's Business Daily