Once upon a time, dividends were considered a reliable way for shareholders to compound their investments or build a steady stream of income. But the financial meltdown that washed over Wall Street last year and the recession that continues to wipe out profits changed all that, with some predicting that the pace of dividend reductions or eliminations will be the worst in at least 50 years. So we set out to highlight companies that have managed to withstand the onslaught of bad news and continued to reward shareholders with increased payouts.

Surprisingly, there are still dozens of companies that have boosted their dividends over the past year. To narrow our focus, we considered those that have done so since last summer, when stock trading volatility (and dividend cuts) really picked up, and then we eliminated companies that declared only “token” increases. Our final cuts were based on a judgment of earnings and dividend reliability, as well as strong balance sheets.

Hardest hit by the dividend reduction trend (and underlying earnings collapse) has been the financial sector, but there are exceptions. One such company is Hudson City Bancorp, a Paramus, New Jersey thrift known for its conservative lending practices. The company earned 90¢ per share in 2008, up from 58¢ a year earlier, and increased the dividend in February for the fifth straight quarter. All told, shareholders have enjoyed a 59% compound annual growth rate in the dividend since the company went public in 1999.

Another growth story, both literally and figuratively, is that of Monsanto. This agricultural giant ($42 billion market cap) operates two segments: Seeds & Genomics; and Agricultural Productivity, which includes animal farming and crop protection. It earned $3.39 per share in fiscal 2008 (ended in August) and should net about $4.50 in fiscal 2009. Continuing a recent pattern of raising the dividend every three quarters, the April payout will rise by 10.4%, to an annual rate of $1.06 per share, still less than one-third of earnings.

We consider it a very positive sign when management owns a significant amount of company stock. Those in this month’s portfolio with 5% or more include Baxter, 5.0%; Becton Dickinson, 5.3%; Ecolab, 12.5%; Emerson, 5.7%; Hudson City, 10.4%; New Jersey Resources, 7.4%; Nike, 7.3%; South Jersey Industries, 8.8%; and Valspar, 7.3%.

Other companies that qualified, but were recently featured, include Colgate-Palmolive, Dover Corp., ExxonMobil, Honeywell, Johnson & Johnson, PepsiCo, Kimberly-Clark, Medtronic, McDonald’s, Procter & Gamble, and Walgreen.

Our list was scrutinized by resident staff analysts Robert Briechle, Michael Burke, Dave Fish, and Pete Cirocco, who all agreed on the worthiness of these companies for long-term accumulation.

To follow The Moneypaper's portfolios, subscribe for a special price of $97.