Dividend stocks used to have a reputation for safety even in dicey markets. Now, though, relying on a company to keep paying its dividend takes a leap of faith — and often proves disastrous .

In the past, if stock investing made you uncomfortable, you could put your money into dividend-paying stocks and not worry much about potential risk. At worst, you could count on companies in certain industries, particularly utilities, to see their share prices stay relatively stable and keep paying healthy dividends throughout your lifetime. Sure, you probably wouldn’t find huge growth stocks in those industries, but the security made many investors sleep better at night.

Nowadays, that sense of security is a thing of the past. Enron turned the boring utility industry into a high-growth mecca before flaming out in accounting scandals. And now, the credit crisis has forced a host of companies to cut their dividends — sometimes for the first time in years — in order to conserve cash and preserve their ability to operate.

With all the current turmoil, how can you make sure the stocks you buy won’t be the next ones to announce a painful surprise?

Find the right dividend stocks

Among dividend stocks, two factors are most attractive. Ideally, you want a stock that will keep raising its dividends over time. Yet you also want the company’s prospects to improve, so that it remains able to afford making dividend payments that increase over time.

In a recession, of course, that’s a tall order. Because most industries are seeing earnings fall, even keeping dividends constant requires an increasing commitment of a company’s profits toward shareholder payouts.

As a result, you might actually find the best deals among stocks that aren’t paying the absolute highest dividend yields available. Although it may seem counterintuitive — typically, you’d want to get as much income as you can — you’d much rather have a more modest payout that’s sustainable.

The market hates surprises

If you think about it, though, you’ll realize that this idea makes some sense. Stocks tend to discount future news, so if a stock raises its dividend at a healthy clip, investors start to expect that to continue. When it proves ultimately unrealistic and a company has to rein in its payouts, those same investors are disappointed — and shareholders see their shares lose value.

On the other hand, a stock with a more gradual growth rate in dividends may not enjoy the highest returns in good times, but it also won’t disappoint investors when the bad times come. That protects shareholders — and attracts new investors who’ve gotten burned with other stocks.

Combining payouts and dividend raises

How do you find these stocks? The easiest way is to focus on two factors: payout ratios and dividend growth over time.

Payout ratios measure how much of a company’s earnings must go to pay dividends. Although exact figures differ, you don’t want to see payout ratios get too high, or else the lack of capital will smother growth and eventually hit profits. With dividend growth, finding the sweet spot between too little and too much growth is essential.

Screening for stocks with reasonable dividend growth over long periods of time and healthy payout ratios, I found the following: