NEW YORK (Stockpickr) -- This article is part of a regular series in which I focus on the U.S. Dividend Champions, a list compiled and tracked at DRiP Investing. The list is comprised of stocks which have increased their dividend payouts for at least 25 consecutive years.

The below strategy is but just one in what I believe should be a basket of strategies from which to allocate a portfolio. However, I consider the method detailed below, which combines the Dividend Champions with two simple ranking tools, one of the most effective ways to filter for high-quality dividend-paying stocks.

Some studies have shown that stocks with high yields and low payouts perform better over time than stocks with higher payouts and lower yields. In the past, I have cited a Credit Suisse study on the S&P 500, which states: "We find that companies with low payout ratios tended to perform better than companies with high or negative payout ratios. Portfolios of companies with high dividend yields and low payout ratios have the best returns."

Clearly, past performance is not a guarantee of future returns. The study cited above also did not focus just on Dividend Champions but rather the entire S&P 500. That said, if an investor is seeking to narrow the list of potential candidates to a more manageable list, I think the Dividend Champions list is a great starting point. If we were to focus on the entire universe of stocks in our search for high yields and low payout ratios, we might find several qualifying stocks that have no history of dividend increases or that will not continue to increase or even pay dividends.

The stocks on the Dividend Champions list, on the other hand, have a strong tradition of raising dividends. By applying the same principles that have been successful on a larger and a less-selective universe of stocks to the Dividend Champions, I believe we can find potential investments.

I ran this screen last month, and many of the same names remain. By simplifying our search for equity income and looking for stocks with a history of increasing dividends and paying investors a healthy yield without eating up a large percentage of earnings to do so, we can find potential winners with staying power in a portfolio.

The method used to generate this list was to first take the top third of the Dividend Champions based on yield and then sort this list based on the top third with the lowest payout ratio. This month's list has 98 stocks, so the 33 top-yielding stocks were my starting point. I then ranked the remaining 33 based on payout ratio. Here are the 11 resulting stocks:

The data source for this screen is Finviz, screening the stocks based on yield and payout on a real-time basis. However, another option is to use the free spreadsheet provided by DRiP, updated on Nov. 30.

At the time of publication, author had no positions in stocks mentioned.

Scott's Investments, focuses on consolidating and tracking free online investment resources for the public with an emphasis on ETFs, portfolio/trading strategies and macroeconomics. Follow Scott's Investments on Twitter.