When both the stock market and interest rates were hitting bottom last year, dividend stocks with stable payoutsoffered investors the best of both worlds: great bargains and high income. Yet after the market's big rally, many stocks have seen their dividend yields drop sharply. Do those falling yields mean that you should get out of your dividend stocks now before it's too late?

A look at the numbers
A company's dividend yield depends on two numbers: the amount of its dividend and the current price of its stock. For the most part, dividend payouts stay relatively constant; a company might raise or lower its dividend occasionally, but such moves don't usually happen more than once a year.

On the other hand, stock prices can fluctuate wildlyover short periods, as we've seen lately. When they do, they can have a dramatic impact on a stock's dividend yield, even if the dividend itself doesn't change much. For instance, compare the yields that these dividend stocks were paying back in March with what their current dividend yields are.

Stock

Dividend Yield on Feb. 28, 2009

Dividend Yield on Oct. 29, 2009

Current P/E Ratio

Coca-Cola (NYSE: KO)

3.7%

3.0%

20.0

Novartis (NYSE: NVS)

4.7%

3.3%

15.7

Merck (NYSE: MRK)

6.3%

4.9%

8.2

Colgate-Palmolive (NYSE: CL)

2.7%

2.2%

20.2

Alcon (NYSE: ACL)

3.1%

2.4%

20.9

Avon Products (NYSE: AVP)

4.6% Continued...