Forget the doomsayers claiming that there's been a dividend bubble and it's bursting, two fund managers said in a panel discussion at the Morningstar Conference on Thursday.
"As CEOs allocated more of their money toward dividend growth, interest in dividend stocks took hold," Hersh Cohen of ClearBridge Investments said. That has taken dividend stocks from what he characterized as "extremely undervalued" a few years ago to "fairly valued" today.
"The stocks got extended, not overpriced," he said.
And companies have continued to raise dividends, leading Cohen to call the current environment the "Golden Age" for dividends. He said that the last five months has seen the "most staggering" increase in dividends.
He ticked off companies like Caterpillar, Wal-Mart and 3M that have all hiked their dividends in recent weeks.
But while he still likes dividend stocks, he does concede that it's harder finding good ideas now.
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Tweedy, Browne fund manager John Spears agrees. "It's an easier climate for selling stocks than buying them," he told the same panel.
While price is important when buying stocks, Cohen says "investors lose sight that their income can double in nine years" with dividend payers.