Historically low interest rates have caused undue misery for income investors. Many of the fixed-income investments that yield seekers traditionally relied upon in the past haven’t generated sufficient income in years.

Back in the 1990s for instance, a one-month certificate of deposit (CD) at your local bank offered an average yield of around 5.25%. Over the past five years, by contrast, one-month CDs have yielded an average of 0.24%.

That’s forced income investors of all stripes into dividend stocks. This consequential shift means that some of the most conservative investors are taking on risk for which they may be ill-prepared, particularly when it comes to high yielders.

Indeed, the tradeoffs between low-risk CDs and even a relatively staid dividend stock can be significant, including the potential loss of capital.

Once income investors have decided that they’re willing to accept the additional risk of equity investments, the question is how to select the right dividend stocks.

Naturally, even the most risk-averse income investors can be lulled by the siren song of high-yielding stocks. Unfortunately, high yielders don’t come without high risk, or at least higher risk than their lower-yielding peers.

In some cases, a high yield is a warning sign that all is not well with a company and that future dividends may not be secure. If a company’s financials are stretched while its fundamentals are eroding, then the payout is often the first thing to go.

To add insult to injury, a dividend cut or even an outright suspension is often accompanied by a steep decline in the share price, as income investors dump their former dividend darling.

When it comes to our Dividend Champions, we take a safety-first approach and consider a range of factors to ensure, as far as possible, that our stocks can sustain and grow their dividends over time.

To that end, we look for companies with long-term track records of regular dividend payments, solid balance sheets, healthy cash flows, moderate payout ratios, limited cyclicality of profits, and decent growth prospects.

This methodology results in a portfolio of high-quality companies with dividend yields between 2.5% and 5% and expected dividend growth between 5% and 10% annually. We believe that this group provides a far better balance between risk and reward than a portfolio of high yielders.

A recent study by a group of U.S.-based academics provides statistical support for our approach. In reviewing the performance of almost 4,000 U.S. companies over a 50-year period, they found that dividend-paying stocks beat non-dividend payers by an average of 1.5 percentage points per year.

In particular, the middle group of dividend yielders (i.e., those with an average yield of 4.3%) surpassed both the low yielders and the high yielders in terms of total return.

Equally important, this superior performance was achieved with lower risk, as measured by the standard deviation of returns, and that translated into stronger risk-adjusted returns (based on the Sharpe ratio).

Our focus on risk is not merely academic. That’s because, apart from a stable and growing income stream, income investors should also be sensitive to the risk of capital loss.

To demonstrate this key point, let’s compare the performances of two dividend favorites.

The first is a medium-dividend yielder, BCE Inc. (TSX: BCE, NYSE: BCE), the Canadian telecom giant and one of the top holdings in our Dividend Champions Portfolio.

The second is Crescent Point Energy Corp. (TSX: CPG; NYSE: CPG), a Canadian oil and gas producer that was once a high yielder until the energy crash forced management to slash its payout.

In the accompanying graphs, on the next page, we assess the performance of these two stocks over the five-year period through the end of December 2016.

At the beginning of 2012, shares of Crescent yielded nearly 2 percentage points more than BCE. But even during the heady days of the energy boom, Crescent was unable to grow its payout.

And then once the boom turned to bust, Crescent was forced to slash its dividend twice, reducing its payout by a total of nearly 87%, leaving its beleagured stock among the sector’s walking wounded.

Meanwhile, BCE continued its slow but steady pace of dividend increases. And by 2016, BCE’s cumulative dividends paid over this period exceeded those of Crescent.

Looking ahead, analysts forecast that BCE’s dividend advantage will continue to grow, so that by 2019 the cumulative dividends BCE will have paid to shareholders who’ve held the stock since 2012 (about C$24 per share) will be 60% higher than the total payout offered by Crescent over that same period (about C$15 per share).

On a total-return basis in Canadian dollar terms, the comparison over the trailing five-year period is even more stark: Crescent’s shareholders suffered a loss of nearly 44%, while BCE investors enjoyed a gain of more than 75%, a performance gulf of nearly 119 percentage points.

We’ve chatted with a number of income investors who simply can’t quit high yields. While not every high yielder is a problem child, even the least risky of this high-risk cohort shouldn’t dominate an income investor’s portfolio.

After all, a troubled high yielder, or even an otherwise solid high yielder that’s hit hard times, can give income investors the worst of both worlds: lower income and a permanent capital loss.