(MONEY Magazine) – No one gives a hoot about income during a go-go growth market. Ah, but when that market comes tumbling down--as it did in the waning days of summer--investors suddenly get misty-eyed about their old friend, the dividend yield.

As well they should. "In a difficult market, dividends provide a safety net under the stock price," explains Geraldine Weiss, editor and publisher of the newsletter Investment Quality Trends. Studies show that about half the return on stocks has historically come from dividends. But when shopping for income stocks, you want more than a high current yield: You also want a company with a record of raising its payouts. "Stocks that regularly grow their dividends also indicate rising earnings and thus a rising price trend," says Weiss. Because dividend hikes come with a fair amount of publicity, these companies are essentially making a statement. "They're saying they're confident that both earnings and dividends will grow in the future," says Rao Chalasani, chief investment strategist at Everen Securities.

Weiss and research firm Morningstar helped us sift through more than 7,000 stocks to find four that met our demands. The first screen sought companies sporting a compound annual dividend growth rate of 10% or more over the past 12 years (vs. 5% for the S&P 500). We also looked for companies that have modest debt loads and pay out no more than half their annual earnings as dividends; otherwise, those dividend hikes are at risk when earnings slow down. We required dividend yields better than the S&P's 1.6%; projected earnings growth rates above 10%; and price/earnings ratios of less than 20. The four strongest companies that cleared our hurdles are discussed below in order of their projected 1999 earnings growth.

As the country's largest processor of rolled steel, Worthington Industries may not be a glamour stock. But the Columbus, Ohio company, which sells $2 billion worth of everything from floor joists to auto-body panels, has raised dividends for 30 consecutive years. Investors spooked by low steel prices have pounded this stock down, says Weiss, but that's a mistake: "Worthington doesn't sell steel, it processes it. So it can actually take advantage of those low prices." Anthony Carpet of Goldman Sachs expects the firm to grow earnings 35% over the next two years.

Straying from its strategy of consistent quality, good design and infrequent markdowns turned out to be a fashion fiasco for retailer The Limited. But a restructuring effort led by founder Leslie Wexner is finally bearing fruit for the company, which has $9.2 billion in sales. Wexner brought in new executives, closed hundreds of stores and spun off Abercrombie & Fitch, a casual-clothing line. In addition to its Lane Bryant, Structure, Express and Henri Bendel stores, The Limited is also the majority shareholder in Intimate Brands, which runs the profitable Victoria's Secret and Bath & Body Works. With earnings expected to grow 13% this coming year, "things are looking much brighter now," says Don Taylor, manager of the Franklin Rising Dividends Fund, who notes that the Columbus company has boosted dividends 12 times in 15 years at a rate of 16%.

The consolidation craze among banks hasn't left First Union behind. The Charlotte, N.C. company, which has assets of $229 billion, has dined on more than 70 financial firms over the past two decades, including the Money Store and Corestates Financial earlier this year. That's helped First Union stay in the game by offering a broad range of financial services--including credit cards, mortgages and securities brokerage--to 16 million customers up and down the East Coast. Troubles in Asia and Russia have taken the shine off all bank stocks lately--even domestic institutions with little or no foreign exposure like First Union. But its earnings are still sterling. "This is a 12% grower long term, 13% near term," says Bill Stromberg, manager of T. Rowe Price Dividend Growth fund. That assessment is supported by First Union's record of bumping dividends up 15% annually over the past 12 years.

The past year has been tough on tobacco companies, including industry leader Philip Morris, as state attorneys general pursued lawsuits and Congress considered a bill that would have cost the industry billions of dollars. But Congress failed to act, and the lawsuits seem less threatening today. Meanwhile, troubles at home have done nothing to stop the Marlboro Man from befriending many a foreign smoker. With $72 billion in annual sales, Philip Morris grows earnings at a 12% to 14% clip, and can continue at that rate over the next three to five years, says Stromberg. The stock's low P/E ratio fails to reflect the New York City company's successful food business, which includes the Kraft and Miller Brewing brands, adds Taylor. Philip Morris has a 20% dividend growth rate over the past 12 years and has raised its payout 33 times in the past 30 years.

--LISA REILLY CULLEN