Find Cash-Generators

Shearer looks for companies that can generate a lot of cash. "That shows they can grow their business from internally generated funds without relying much on leverage," or debt, he says. Except for utilities and financial companies, a company's debt should always be less than half its book value, which is a measure of a company's net assets.

Because of their financial strength, "our companies tend to be a little more stable in down markets," Shearer says. While 21 percent of the dividend-payers in the S&P 500 cut or eliminated their payouts in 2009, Shearer says only 10 percent of the BlackRock Equity Dividend Fund's holdings did so.