After a heinous August and a rather inauspicious start to September as triple-digit declines in the Dow set the stage, low-risk investments now are in focus.

But investors should not make the mistake of thinking they have to settle for low-risk, low-return investments. There are a host of high-yield stocks out there with big dividends and stable cash flows that have been enjoying significant share appreciation in 2011. These investments offer the best of both worlds — cash-rich blue chips that throw off plump dividends as well as outperform the major indices.

True, some of these blue chips could see momentum wane in the months ahead as successes become harder to duplicate in coming quarters, or shares move into overbought territory. And yes, blue-chip dividend stocks are not immune to market downturns. However, there’s a lot to be said for strong upward momentum in a tough market and a nice quarterly income stream to hedge your bets.

Here are five high-yield blue chips that have dramatically outperformed the major indexes so far in 2011, posting double-digit returns despite a roughly 8% slide for the S&P 500 and a 5% decline for the Dow Jones Industrial Average. (Returns are as of Tuesday’s close to accommodate this column’s deadline.)

Consolidated Edison

• Dividend yield: 4.3%
• Year-to-date return: 11.8%

Consolidated Edison (NYSE:ED) is the definition of a boring dividend stock. A regional electric and gas utility, you’ve probably never heard of it if you live outside the tri-state New York, New Jersey and Pennsylvania area.

But shares have dramatically outperformed the market so far this year, tacking on double-digit gains year-to-date. So what gives?

True, Consolidated Edison didn’t set the world on fire with its August earnings report. Net income fell slightly but topped expectations. But perhaps the biggest reason for longer-term performance is the previous streak of four consecutive quarters with year-over-year profit increases. In the first quarter, for instance, net income rose 37.1% over 2010 numbers.

It’s obviously unrealistic to expect a utility to keep up that streak forever. And Wall Street price targets for Consolidated Edison aren’t predicting much more upside after the current run. But momentum can’t be underestimated in this environment, where investor psychology is at play as much as fundamentals.

On the dividend front, ED has upped its payout every year for 36 straight years and has paid a dividend since 1885. And a reliable 4.3% yield with a history like that is a pretty good selling point for investors even if shares do move sideways for a bit.

Bristol-Myers Squibb

• Dividend yield: 4.5%
• Year-to-date return: 10.6%

Bristol-Myers Squibb (NYSE:BMY) has defied the downdraft in Big Pharma during the past few years. That trend has continued in 2011, as shares have tacked on 10.6% thanks to strong numbers and a promising drug pipeline.

In July, Bristol-Myers raised its fiscal 2011 guidance after profits slumped slightly but sales jumped more than 14%. This was after an earnings increase of 33% in the first quarter. But perhaps most impressive for BMY was the recent warm reception for its jointly produced Eliquis blood thinner after a big study, paving the way to tap into sales of as much as $3 billion a few years down the road.

And lest you think that this potential blockbuster is a one-trick pony, BMY also has made strides in several smaller but highly lucrative categories. From a new melanoma drug Yervoy, a cancer treatment that costs about $100,000 per patient, to anti-rejection drug Nulojix that received approval for use in the U.S. and Europe to aid kidney transplants, Bristol-Myers Squibb is working hard to build a suite of powerful drugs. That could result in powerful revenue down the road.

In the immediate term, a 4.5% dividend paid for over a century is a great reason to give BMY stock a shot in your portfolio. Big Pharma has fallen on hard times, but the outperformance of Bristol-Myers proves it could be the best opportunity this sector has to offer.

McDonald’s

• Dividend yield: 2.8%
• Year-to-date return: 14.8%

McDonald’s (NYSE:MCD) has surpassed analysts’ expectations in four of its past five earnings reports, most recently with second-quarter numbers boasting a 15% increase in profits. While its $24.1 billion in revenues has only risen at a modest 3.6% annual rate during the past five years, net income has surged at a 14.6% annual rate — proving MCD knows how to maintain margins and grow its bottom line even if sales don’t soar.

McDonald’s is up significantly this year — more than 14% — thanks to these impressive numbers. In the longer term, MCD stock has more than doubled since early 2007 while the rest of the stock market was hit hard by the financial crisis and resulting economic downturn.

There are many reasons for McDonald’s longer-term success, including a very profitable push into the specialty beverage market with its McCafe drinks during the past several years. But the most significant element for investors going forward is the stewardship of CEO Jim Skinner. The exec has helped to boost McDonald’s sales per store by 50% since he took over in 2004, and the store continues to expand its already ubiquitous brand abroad.

Throw in a nearly 3% dividend and you can see why McDonald’s is doing so well on Wall Street. With a forward P/E north of 15, shares are a bit pricey — but the many merits of this stock hint that it is not quite in overbought territory yet.

Colgate-Palmolive

• Dividend yield: 2.6%
• Year-to-date return: 10.4%

Consumer products giant Colgate-Palmolive (NYSE:CL) is a typical low-risk dividend stock investors flock to in times of trouble. As inflation creeps up and wages continue to erode, staples like soap and toothpaste are one of the few areas where consumer spending seems safe.

But Colgate-Palmolive is more than just safe. While revenue has been mostly flat for the past three fiscal years, profits are up soundly — with a projected EPS of over $5 for the current fiscal year, compared with $3.66 for fiscal 2008. After a strong earnings report in July, Morgan Stanley (NYSE:MS) upgraded the stock to “overweight” and put a $92 target on shares. Not a dramatic jump from current valuations, but a decent sign after recent appreciation. RBC Capital Markets also upgraded the stock and raised its target.

The growth at Colgate is coming from overseas, with roughly half of global sales coming from emerging markets like India. That stands to rise in the years ahead, as organic sales are growing at a roughly 5% clip in emerging markets.

Throw in the bulletproof dividend and you have a strong income play. Colgate has paid dividends since 1895. And if that’s not impressive enough, dividends have used up less than half of the company’s free cash flow in each of the five years — meaning there is plenty of extra money to boost payouts, grow the business or weather hard times.

Hershey Co.

• Dividend yield: 2.5%
• Year-to-date return: 20%

Hershey Co. (NYSE:HSY) reported strong earnings at the end of July, including second-quarter profits of 56 cents per share, up 10% from a year ago. Hershey earnings beat expectations by a penny per share and tallied a second-straight quarter of double-digit profit growth thanks to a 7.5% jump in sales.

That growth is coming from creative ways to tap into the snack food market — including new products like Reese’s Minis and Hershey’s Drops — to connect with consumers looking for simple pleasures as they forgo summer vacations or big back-to-school shopping sprees because of the downturn. And as with Colgate, emerging-markets growth is helping this big-name chocolatier connect with even more consumers worldwide. HSY also is tackling inflation through cost increases that haven’t seemed to squash sales. It expects its full-year profit to rise 10% this year, above its previous guidance of 6% to 8%, thanks in part to a March move to increase its prices.

On the dividends front, HSY has paid dividends without interruption since 1930, so this is a dividend stock you can believe in.

Yes, Hershey stock might be a bit pricey right now, with a forward P/E of over 18. But 11 Wall Street “experts” surveyed by Thomson/First call have a median price target of $62 for shares — an additional 10% upside. What’s more, Hershey also has returned cash to HSY shareholders through stock buybacks. During the first quarter, it bought back $100 million of its own stock as part of a $250 million share repurchase program. Hershey’s board also OK’d another $250 million share repurchase program in late April. That’s bullish for the stock going forward.