When you run across a stock with a 16% yield you at least have to check out the story. Prospect Capital Corp (NASDAQ: PSEC) is just such a company. Last week PSEC declared its 20th consecutive increased dividend.

In sharing my adventures and opinions in the investment world I try very hard to be candid without crossing the line into being a promoter. That said, I have been buying stock regularly over the last 12 months and buying on fear has paid off handsomely. As the market has catapulted upward since March the opportunities have diminished. However, I did add PSEC in the last month.

"Kinder Morgan Energy Partners L.P. (NYSE: KMP) is a paragon of consistency; the stock continues to rise and the company continues to deliver on its expectations," says Jack Adamo.

In his Insiders Plus newsletter, he explains, "The master limited partnership has made great strides in cost controls to compensate for the weak economic environment. When things turn around, it could really take off."

"KMP is one of the largest and most respected pipeline and energy storage LPs in North America. It operates or owns interests in more than 26,000 miles of pipelines and 170 terminals.

This past Tuesday I wrote an article on dividend-paying stocks offer investors more protection in tough times. It has only been three trading days since the Tuesday hit and looking back now, the stocks discussed with high, sustainable dividends are holding up just fine.

Whether it's AT&T, Inc. (NYSE:T), Bank of America Corporation (NYSE:BAC), CitiGroup, Inc. (NYSE:C) or Wells Fargo & Company (NYSE:WFC), the stock movements have been negligible. These stocks have been attracting investors seeking safety of principal and a high yield. But remember, most excellent dividend paying companies have a history of raising those dividend payments, and with that fact comes a higher stock price as well.

If the Federal Reserve begins to lower interest rates in the spring and summer, and I believe they will, the yields on these stocks becomes even more valuable. As riskless treasuries are in the 4%+ neighborhood now, if the Fed lowers rates and those yields fall into the 3% neighborhood, the stocks of underlying high-dividend payers will go up.Current yields tend to go together especially if underlying quality is present. For example, for Bank of America to yield 3%, the stock would have to go up to the mid $60's. If you own the stock here at $50-51, you have locked in a 4.40% yield, and if we see declining interest rates, for the stock to remain competitive with US Treasuries, the share price would soar. Not to mention, BAC will probably raise their dividend in 2007, 2008, and beyond.

This is where high dividend paying stocks can be powerful investments...

Georges Yared is the author of recently released books Stop Losing Money Today and Baby Boomer Investing...Where do we go from here?