Regular payouts from dividend-paying stocks can make a big contribution to total returns. Last month we profiled three basic growth and income funds with long track records of success; this month we highlight a newer offering with a lot of long-term potential.

Aston/River Road Dividend All Cap Value (ARDEX), launched in mid-2005, hasn’t received a lot of play in the press, but popped up in screens for the Rukeyser 100 almost as soon as it reached its third birthday.

Management faces few strictures on the market capitalization of its equity holdings; the fund aims to produce yields that exceed the Russell 3000 Value Index. If the team finds a name that offers a compelling yield and strong growth prospects relative to the benchmark, it’s free to jump in with both feet.

This freedom has led to overweight position in telecommunications, business services, and consumer goods and services relative to its peers. The fund’s portfolio is underweight the financial sector–a bit of a surprise given the group’s history of paying attractive dividends.

In that space, management prefers midsize regional banks such as People’s United Financial (NSDQ: PBCT) and insurance outfits such as Chubb Corp (NYSE: CB).

That positioning bodes well for the fund in coming quarters, as the investment thesis for regional banks is particularly compelling. The group often faces fewer pricing pressures these days; most of the money center banks reined in lending, creating a more profitable environment for those left standing.

With the economy improving and loan repayment rates stabilizing, the best-positioned regional banks could scale back loan-loss reserves in coming quarters–a potential boon for profitability.

Despite favorable tailwinds, the fund’s performance was lackluster in 2009. The fund lost only 9.6 percent in the first quarter and gained 8.1 percent gain in the fourth quarter, beating its average peer by about 3 percent. But the fund stumbled in the middle of the year, underperforming the category average by over 9 percent.

Energy-related master limited partnerships–which Elliott Gue discusses in this month’s feature interview–made major contributions to the fund’s performance last year, as did Cracker Barrel Old Country Store (NSDQ: CBRL) and Canadian telecom giant BCE (NYSE: BCE). But those holdings weren’t enough to overcome weak stock selection in financials and technology, both of which acted as major drags on performance. The cumulative effect caused the fund to finish the year near the bottom of Morningstar’s Mid-Cap Value category.

The fund currently yields about 2.2 percent, paying small monthly distributions rather than quarterly payouts. Generating dependable monthly dividends in the neighborhood of 2 cents per share, the fund is an excellent option for investors seeking income and the potential for price appreciation.

As an added plus, the bulk of the fund’s payouts are classified as qualified dividends, and its turnover rate is a low 49 percent; shareholders won’t face hefty tax bills.

A fairly steep expense ratio is our only major criticism of the fund. Although management’s fee is a reasonable 0.7 percent, the fund also levies a 12b-1 fee of 0.25 percent and, as our readers know, we don’t care for those charges.

Nevertheless, we regard the fund as an up-and-comer and suspect that fees might become a bit more bearable as its asset base grows. As that happens and the fees are spread among more investors, they should become less of a concern. And with the Securities and Exchange Commission poised to take another look at 12b-1 fees, these charges could become a thing of the past in the next year or two.

This should be a better year for dividend investors; stabilizing corporate earnings should reduce the risk of dividend cuts. And we’ve already seen a number of firms increase their payouts, including several in consumer discretionary businesses that were among the first to cut.

All in all, Aston/River Road Dividend All Cap Value is a solid buy for investors who want growth and income.