Dividends are typically paid quarterly. So if the stock pays an annual dividend of $2, you'll receive four payments per year of 50 cents for each share you own.

But you'll want to focus on the dividend yield, which is stated as a percentage, not the actual dividend amount, because the yield tells you the return on your investment.

The dividend yield is the total amount paid each year in cash dividends divided by the current price of the shares, expressed as a percentage.

While 3.5% might not sound like a lot, it can add up over time. And for many of these companies, the yield is far higher than you'll earn in a CD nowadays.

Of course, the big drawback is that the money you invest in stock isn't FDIC-insured like it is when you put it in a bank.

The value of your shares can go down, and we don't have to tell you how volatile the equity markets are. For all you know, the stock market could take a 5% nosedive next week, and the value of your stock could go with it.

But you can minimize the risk and anxiety by considering the beta value of the shares before you buy.

It's a common measurement of how volatile a stock is compared to the overall market.

A beta below 1 indicates that a stock's price moves less than the market average, while anything above 1 indicates the stock moves more than the market average.

It means the smartest place to put your money is in companies that have a long record of paying substantial dividends and a beta lower than 1.

They're not hard to find. Here are a few of the blue chip stocks in the Dow Jones Industrial Average you might want to consider:

Verizon, the communications giant, is paying a whopping 5.05% dividend yield and a beta of 0.54.
The Coca-Cola Co. pays a more moderate 2.89% dividend but with an even lower beta of 0.53.
ExxonMobil Corp. is the world's largest oil company with a dividend yield of 2.17% and a beta of 0.50.
Procter & Gamble, a huge maker of everything from laundry detergent to pet food, offers a dividend yield of 3.12% with the lowest beta of the bunch at 0.45.

Other possible picks include AT&T (with a dividend yield of 5.54%), Merck (4.45%), Pfizer (4.04%), Intel (3.03%) and General Mills (3.15%).

(You might wonder why we haven’t included high-flying Apple. Although the innovative iPad maker recently announced its first dividend in years, the yield is only 0.26%.)

Be aware that share price and dividend yields move in opposite directions. So, as share price increases, the dividend yield will decrease.

Companies can also cut their dividends anytime. But solid payers such as the companies mentioned here have decades-long records of increasing dividends.

Investing in shares with high dividend yields also provides some protection against falling share prices.

Let's say you invested in AT&T, and the stock price fell 2% over the next year. You'd still come out ahead because of the 5.54% dividend you were paid.

In fact, you'd still out-earn the return on any CD you can buy.

You can build in an extra level of protection against falling share prices by using stop-loss orders.

That's where you tell your broker, or set your computerized trading program, to sell a specific company's shares if their price ever falls to a predetermined amount.

Say you buy an attractive stock at $30 per share with a 5.5% dividend. You know you're taking on some risk, but under no circumstances are you willing to lose more than 10% of your principal.

If you set a stop-loss order at $27, you can fully protect 90% of your principal and limit your risk to a 10% loss.

Losing 10% of your money hurts, but it's still better than losing 15%, 20% or more. And no matter how stable a stock appears, there is always a risk that you can lose money.

After you've held your stock for six months or so and are hopefully up a few percentage points, you can increase your stop-loss limit.

At some point, you'll hopefully be able to use your stop-loss orders to guarantee a profit rather than minimize losses.

Let's say you bought a great dividend-paying stock at $30 a share last year and it's now $35 a share.

You're already up 16% in share price alone. There’s no point about risking principal now, especially since you bought with the intention of earning that 5.5% dividend.

So if you want an extra piece of mind, maybe you put in a stop-loss order at $32.50. Even if the stock nosedives one morning, you’ll still make 8% on the deal, plus all the dividends you’ve earned in the meantime.

The risk with setting stop-loss orders too high is that your stock will sell off in regular market fluctuations.

You don't want to buy a stock at $30 then immediately set a stop-loss order at $29. There's a good chance that, in the course of a week or two, it could hit that price.

Seeking a higher yield in dividend stocks doesn't require you to lock up your principal for decades, but you should expect to hold onto these shares for at least the next few years.

Remember that there is no such thing as a "risk-free" stock. All stocks can decline in value, and past performance is never an indicator of future expectations.

But the good dividend payers mentioned above have a history of being more stable and less risky than most other stocks.

You have to ask yourself if it's worth taking a risk of losing a little principal if you can earn 5% on your money when your only safe option is 1.5% in a CD.

You can also potentially grow your earnings further by reinvesting the dividends.

Instead of being returned to you, the dividends are used to purchase more shares. And because those new shares can also earn dividends, it allows your money to compound just as it would with interest on a CD.

With the Federal Reserve determined to keep interest rates at record lows until at least late 2014, it will be years before CDs or money market accounts are paying reasonable returns again.

If you take the plunge, we suspect you'll be thrilled to hold onto those dividend-paying shares -- and to keep collecting your quarterly checks -- for the foreseeable future.

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