A lot has changed on Wall Street since Bill Bahl and Vere Gaynor teamed up to launch Bahl & Gaynor Investment Counsel Inc. on July 2, 1990.

The Dow-Jones Industrial Average, for example, closed that day at 2,899.26. This year the Dow has hovered around 18,000. And after being in the same location, 212 E. Third St., since opening the doors, the firm will move in August to larger quarters on the 27th floor of the First Financial Center.

But one thing that won’t change is Bahl & Gaynor’s devotion to the idea that stocks paying growing dividends are the best road to profitable investing.

“What really drives the value of an investment?” says Bahl, chairman of the firm. “It’s the earnings it throws off, whether it is an apartment building, a business or a stock,” he says. “When a company is committed to a dividend and they grow it every year, that’s a signal most investors don’t pay much attention to.”

He points to stock market data dating from 1926 showing that more than 40 percent of the equity return from stocks comes from dividends.

Bahl & Gaynor’s focus on dividends has allowed it to become one of Cincinnati’s most successful investment advisory firms over the last 26 years, with more than 36 employees and $14 billion in assets under management, pretty evenly divided between high net worth investors and institutions.

Bahl and Gaynor couldn’t have picked a better home for their investment style.

“Cincinnati is an epicenter for this type of investing,” says Vere Gaynor, president, ticking off a list of Cincinnati companies such as Procter & Gamble Co., Cincinnati Financial Corp. and Cintas Corp. that regularly increase their dividend.

“There’s an awareness in the corporate community here of how powerful long-term dividend growth can be,” he says.

Bahl says that not all dividends are created equal.

“One of the things we look at is the payout ratio, the relationship of dividends to earnings,” he says. “The company that’s at a 30 percent payout ratio, all things being equal, is much more attractive to us than a company with a 70 percent payout ratio. Why? Because they have more ability to grow the dividend.”

A company with a high payout ratio will eventually run out of steam to increase its dividend, he says.

Bahl and Gaynor were friends before they were business partners.

Bahl, chief investment officer at Fifth Third Bank, and Gaynor, manager of Scudder, Stevens & Clark’s local office, got to know each other while calling on institutional clients. They talked initially about forming a partnership in 1984 but decided they needed more experience.

Bahl moved to on to become chief investment officer at Northern Trust Co. in Chicago, but they stayed in touch and eventually decided to team up.

The firm also has a different approach to hiring. It doesn’t rely on recruiters or extensive interviews. “We only hire people we work with or know well,” says Bahl.

That can take years, in one case a decade. “But we know these people and we’ve worked with them before,” he says.

Adds Gaynor: “Probably the most intangible, but important ingredient, for an investment firm is culture. The way you develop and nurture culture is having a copacetic environment.”

Another key is that the firm is employee owned. “Everybody here in the case of the managers is an owner and the staff participate as though they were owners in the profits of the firm,” he says.

Bahl, 65, and Gaynor, 68, say they have no plans to retire.

“We share a love for the business and a love for this business and genuine affection for each other,” says Bahl. “We have a really good partnership because we can respect each other’s opinions and come out with the right conclusions for our clients.”