If you're skeptical of the market's good intentions, insulate yourself from the volatility by picking companies in steady, recession-proof industries. You can further reduce your risk by focusing on equities that throw off generous dividend yields — the "bird in hand" strategy.

Utilities fit the bill perfectly. Some with very safe dividends are paying as much as 5%–6% up front. What's more, while traders (since the March 9 bottom) have rushed back into financials, retailers and other beaten-down stocks, they've overlooked utilities.

Most utility shares, electric and gas names, in particular, are only starting to make their move. So you can still buy real value, instead of playing the "greater fool" game of chasing prices higher and higher.

The Golden Rule of Growth

In the utility sector, there's a broad rule that higher-yielding stocks harbor lower potential for capital appreciation, and vice versa.

Thus, in building a collection of utes, you want to think about your goals and needs. If you're already retired, for example, and you're trying to maximize your monthly income, it makes sense to tilt your purchases toward companies with higher dividend yields.

On the other hand, if you don't expect to retire for several years (or you're retired and your portfolio already generates more than enough income for you to live on), I advise you to lean toward lower yielding stocks.

Over the long run, five to 10 years, say, the faster growth rates of the lower-yielding companies are likely to produce a higher total return (income plus capital gains).

Let's begin with two picks for income seekers…