Top 10 Highest-Yielding S&P 1500 Stocks

One of the best ways to play declining interest rates, according to Jim Cramer, is to invest in high-dividend-paying stocks.

That advice prompted us at Stockpickr.com to sort through the components of the S&P 1500 Composite Index to find the stocks that pay dividends in excess of 7% and have market capitalizations of at least $350 million. We then whittled the list down to the Top 10 Highest-Yielding S&P 1500 Stocks.

When interest rates drop, bonds and income-paying stocks rise. Investors are willing to pay up for high dividends because they can no longer get the same rates from certificates of deposits and short-term Treasuries. High-yield stocks have the advantage of both income and the potential for capital appreciation.

The highest-yielding stock on the list is American Capital Strategies , an investment company that invests in public and private companies, employee buyouts, recapitalizations, mezzanine financings and debt instruments. The stock pays a high 9.1% yield, and the company has paid quarterly dividends for the last 10 years. It has a price-to-earnings (P/E) ratio of 4 and a P/E-to-growth (PEG) ratio of 1.4.

American Capital appears in the Barron's Insider Purchases 8-11-07 portfolio at Stockpickr, which lists the largest insider purchases mentioned in the Aug. 11 edition of the weekly financial publication. The company's CEO and a director recently purchased 73,000 shares amounting to $2.8 million worth of stock.

The Barron's Insider Purchases list also contains NuStar Energy , due to the fact that the CEO and three directors recently purchased 31,900 shares, or roughly $2 million worth of stock. NuStar has a yield of 6.3%, with a P/E of 21. Energysouth also makes the Barron's Insiders list because three directors and an officer recently purchased 39,596 shares, or $2 million worth of stock. Energysouth has a yield of 2% and a P/E of 28.