Legg Mason's Hersh Cohen says dividends are the key to successful investing in today's volatile market.

“Historically, dividends have provided about 40 percent of stock market returns,” despite abysmal market returns during the past 10 years, Cohen tells CNBC.

“Stocks go up and stocks go down, but dividends over the last decade went up almost six percent a year compounded,” Cohen points out.

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“You can get these great companies with yields almost as high or even higher than 10-year Treasuries … with the opportunity of dividend growth from these companies as well.”

Companies such as Johnson and Johnson, Heinz, Proctor and Gamble and 3M “have acquitted themselves well,” Cohen says.

Even though the tax rate on dividends will increase next year, Cohen notes that during the 1950s when the marginal tax rate was 70 percent to 80 percent, dividends were still getting raised constantly.

“I think you’ll continue to see dividend increases,” he says. "I’m convinced dividends will continue to go up and shareholders will continue to benefit.”

According to SmartMoney, from 1940 to 1963, the top marginal income tax rate in America was between 81 and 91 percent. Today's federal rates on even the highest earners are much lower.

However, with additional taxes levied by state and local governments, high-income investors can end up forfeiting 60, 70 or even more than 80 percent of their profits from the time they're generated through the moment they're spent.