It's a rule that should be etched into the granite walls of the NYSE: Never underestimate the power of the lowly dividend.

Although little respected and often ignored, more than 137 years of data point to the inescapable conclusion that owning humdrum dividend-paying stocks... and then reinvesting those dividends... beats all other investment approaches hands down. So if dividend-paying stocks make you yawn, it's time to wake up and smell the cash.

In the go-go high-tech boom 10 years ago, income investors were laughed at as fuddy duddies.

Guess who's laughing now? With the markets near where they were a decade ago, dividends have been just about the only return seen by many investors.

Dividends, like the 11% yield seen from the First Trust Active Dividend (NYSE: FAV), are something that can't be taken away once they're paid.

In fact, since 1926 dividends have contributed 42% of the total return delivered by the markets. This makes a massive difference over the long haul. Underestimating the awesome edge income-paying securities give you is the biggest mistake you can make in your investing life.

The odds are so heavily stacked in their favor that income investors almost always come out ahead.

In the 100-yard dash to wealth, income investors start on the 50-yardline. What's more, every time the stock market corrects, growth investors are forced to run backwards for 10 yards. How can they win?

That's why The Daily Paycheck doesn't chase growth. If it comes with a fat dividend, I'll be more than happy to put my money in a fast-growing stock. . . but if not, then it's to the back of the line.

The Top Tip for Earning Daily Income

But investing in dividend payers alone won't build your portfolio into a daily income machine. That's where my top tip for daily income comes into play.

You see, a key aspect of the Victorian definition of a gentleman was someone able to generate enough income to live on from their existing fortune without eating into their seed capital.

Back then it was called "living off your four percents" -- which referred to government bonds that paid around four percent.

Today, Paul has coined a new phrase for this lifestyle. He calls it "living off your monthlies." 

That's because a critical component of the "Daily Paycheck" strategy calls for skewing your investments toward companies that pay regularly monthly dividends.

The idea is to load your portfolio with enough of these monthly payers -- such as the Reaves Utility Income Fund (NYSE: UTG) and Realty Income Corp. (NYSE: O) -- so that you get paid nearly every single day of the month... or more.

When you make the choice to invest in a stock that pays a monthly dividend, you'll probably be surprised when your first check shows up soon.

And you'll be surprised the next month, too, when another check arrives.

After the third month, you'll be spoiled -- you'll find it's easy to grow accustomed to this lucrative new source of passive income. Especially when you load your portfolio with monthly payers and you start getting these checks nearly every day.

And it's not just more convenient to be paid this often, you actually earn more that way. Thanks to the compounding phenomenon, a stock paying out 1% monthly doesn't have a yield of 12%, but actually 12.68% if you reinvest -- a big difference over time.

Plus, many of the best stocks offer extremely stable -- and growing -- income. Several of the monthly payers we've profiled in The Daily Paycheck have seen their dividends surge +100% or more over the past few years.

This combination of convenience, stability, and growing payouts make monthly dividend-payers an absolute "no-brainer" for your new "Daily Paycheck" portfolio.

When you start collecting $60... $80... $120... even $300 dividend checks on a daily basis, your first instinct will be to cash them.

But unless you really need to, don't.

Dividends are one of the most powerful wealth-building tools in an investor's arsenal because of the phenomenon of compounding.

By reinvesting your dividend checks (instead of cashing them), you can buy more shares, which leads to even larger dividend checks.

These larger checks can then be used to buy even more shares and so on. In time, even a small stake in such stocks can grow into a tidy sum. 

(Reinvesting your dividends is a cinch. In fact, many dividend payers do it automatically -- and if they don't, just give your broker a call and he'll take care of it for you in a matter of seconds.)

Look what happens to a $20,000 investment earning a 7% annual yield that's reinvested. As you can see, steady compounding yields amazing results over the long haul. Thanks to the power of reinvested dividends and dividend growth, after 10 years your portfolio could be generating $5,299 in annual income -- that's +278.5% more income when compared to an investor who doesn't reinvest.  In fact, you could be generating an effective yield of 26.5% based on your initial $20,000 investment. It doesn't take a genius to see how quickly your income stream can grow when you invest this way. That's why my $200,000 real-money portfolio always reinvests dividends into its holdings such as Kinder Morgan (NYSE: KMP). It's tempting to take the cash, but I know a little patience will only lead to larger paychecks.