Dividend stocks had a great year and were some of best stock picks on Wall Street. According to S&P analyst Howard Silverblatt, we saw 255 dividend boosts by S&P 500 Index component companies, resulting in about $21 billion in payouts. That’s up dramatically from 157 increases last year and total dividends worth $10.7 billion.

The timing couldn’t have been better either, with most investors looking to build a foundation of low-risk income stocks and add stability to their portfolio. The thinking goes that even if the market moves sideways you will enjoy a nice 3% annualized return from your portfolio if you load up on high-dividend stocks.

But as you’ll see, while there are some big dividend increases that investors could take comfort in this year, there were also several miserly companies that slashed payouts or disappointed Wall Street by failing to put enough cash into their dividend programs.

Here are three of the best and three of the worst dividend moves of 2010.

Best – McDonald’s

McDonald’s Corporation (NYSE: MCD) made big news a few months back with yet another annual dividend increase. This made it the only U.S. company to increase its dividend payouts every year since it went public some 34 years ago.

The 11% dividend hike in September to 61 cents a share from 55 cents a share gives the fast-food giant a new dividend yield of about 3.2% at current valuations. The move isn’t cheap, estimated to cost the hamburger giant an additional $65.4 million a quarter, but that just goes to show you how strong MCD stock is right now and how secure executives are with their cash flow. Shares of MCD stock are up about 23% in 2010.

Worst – BP

Oil giant BP plc (NYSE: BP) certainly had its hands full in 2010 after the Deepwater Horizon oil platform exploded in the Gulf of Mexico on April 20. And in order to fund the clean-up, restitution to Gulf fisheries and hotels and sundry other costs related to the disaster, the company was forced to suspend its dividend altogether and sell $10 billion of its assets.

BP had typically paid out about $2.6 billion a quarter at 84 cents a share. At current valuations that would equal about a 7.7% dividend yield — it had been around 5.5% before the spill and subsequent slump in shares. BP stock is off 24% in 2010.

Best – UnitedHealth

When talking about UnitedHealth Group Inc. (NYSE: UNH) dividend increase in 2010, most shareholders have the same reaction — “about time!” The company went from a nominal dividend of 3 cents a share and a yield of a mere 0.1% to a legitimate payout of 12.5 cents a share and a respectable 1.5% yield at current valuations.

For the past few years, UnitedHealth has made about $3 a share in earnings and delivered a paltry 1% back to shareholders via dividends. UNH had most likely been paying a dividend only for money managers whose portfolio formulas demand a quarterly payday, and the 0.1% yield was enough to pass muster. Now the largest publicly traded health insurance company has moved beyond a token payout to a real dividend. Shares are up 18% to boot in 2010, making it a good year for UNH stockholders all around.

Worst – Microsoft

In September, Microsoft Corporation (NASDAQ: MSFT) announced a boost in its dividend of about 23% to 16 cents a share from 13 cents a share. The move gives MSFT a dividend yield of about 2.3% at current valuations. So why does the tech powerhouse get such a bad grade?

Well, many shareholders were expecting a new yield north of 3%. After all, a large portion of Microsoft’s revenue is now subscription-based and provides reliable cash flows. Many investors were hoping a more respectable dividend would add value to their investment — but with a ho-hum yield even after the increase, there isn’t much enticement. Throw in the 8% stock decline year to date, and you can understand the frustration with the MSFT dividend move.

Best – GE

General Electric (NYSE: GE) made a lot of enemies among income investors during the financial crisis. In early 2009, the company cut its dividend to 10 cents from 31 cents. And while GE is still a long way from previous dividend levels, it is marching back to a respectable yield with a series of increases.

First, GE boosted its October payout by a couple pennies. Then it upped the ante another two cents to 14 cents for the current quarter and its December payout. The conglomerate also restarted a stock buyback program, signaling that its finance and industrial units are generating cash to reward investors. GE has almost lapped the major indexes this year, tallying 19% gains this year, compared to nearly 11% for the Dow.

Worst – Frontier Communications

Rural telecom Frontier Communications Corp (NYSE: FTR) cut its dividend 25% to 18.75 cents a share from 25 cents a share in 2010 to help finance the acquisition of existing lines from Verizon (NYSE: VZ). Apparently, Big Red was tired of its quaint landline business in 14 U.S. states, so it dumped the business on Frontier. The deal included some $5.6 billion in stock, giving VZ a 68% stake in Frontier, but FTR had to cut back its payout to cover the difference.

FTR stock still has a plump 7.9% yield, but that’s down from a range of around 10% previously. What’s more, the move means Frontier has doubled down on stodgy landlines while iPhones and tablet PCs are all the rage. Frontier stock is up 21% so far in 2010, but common sense tells you that growth can’t last — or else Verizon wouldn’t be fleeing the fixed-line biz. As profits start to dry up in the years ahead, the dividend will likely suffer further.