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10 Dividend Stocks With Yields Up to 10%

Frontier Communications, Windstream and CenturyLink rank among the highest-yielding U.S. stocks.
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BOSTON (TheStreet) -- Dividends are crucial to beating stock-market benchmarks and achieving a higher return than that offered by bonds. Dow stocks such as Johnson & Johnson (JNJ) - Get Johnson & Johnson Report offer larger payouts than Treasuries do. Still, Dow components are no match for the highest-yielding U.S. stocks, which are listed below. (Excluded are REITs and MLPs.)

10.

Duke Energy

(DUK) - Get Duke Energy Corporation Report

is an electric utility. Since 2007, it has grown revenue 3.5% annually, on average. Duke swung to a second-quarter loss of $222 million, or 17 cents a share, as revenue increased 13% to $3.3 billion. The operating margin widened from 19% to 22%. Duke's stock trades at a forward earnings multiple of 13, a book value multiple of 1.1 and a cash flow multiple of 5 -- 4%, 34% and 14% discounts to utility peer averages. Around 16% of analysts covering the stock rate it "buy." A median target of $17.48 suggests it is fairly valued.

9.

Pepco Holdings

(POM)

is an electric and natural gas utility. Pepco swung to a second-quarter loss of $54 million, but a per share profit of 34 cents. Revenue declined 1.8% to $1.6 billion. The operating margin extended from 8.6% to 12%. Pepco's stock is expensive based on forward earnings. But it sells for a book value multiple of 1, a sales multiple of 0.5 and a cash flow multiple of 3.8 -- 40%, 65% and 35% discounts to utility averages. Roughly 40% of analysts rate the stock "buy" and 60% rank it "hold." A median target of $18.19 implies that it's overpriced.

8.

AT&T

(T) - Get AT&T Inc. Report

is an integrated telecommunications company. Its second-quarter profit increased 26% to $4 billion, or 68 cents a share, as revenue inched up to $31 billion. The operating margin expanded from 18% to 20%. AT&T's stock trades at a trailing earnings multiple of 13, a forward earnings multiple of 11 and a book value multiple of 1.6 -- 51%, 21% and 38% discounts to telecommunications industry averages. Of analysts covering AT&T, 54% rate its stock "buy" and 46% rank it "hold." A median target of $29.36 suggests a return of 8% in the weeks ahead.

7.

Verizon Communications

(VZ) - Get Verizon Communications Inc. Report

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is the largest telecom company in the U.S. Verizon swung to a second-quarter loss of $198 million, or 7 cents a share, from a year-earlier profit. Revenue grew margially to $27 billion. The operating margin stayed at 19%. Verizon's stock sells for a book value multiple of 2.2, a sales multiple of 0.8 and a cash flow multiple of 2.5 -- 15%, 36% and 38% discounts to telecom peer averages. Of researchers following Verizon, 36% rate its shares "buy" and 64% rate them "hold." A median target of $30.95 implies 2% of upside.

6.

Reynolds American

(RAI)

manufactures and sells cigarettes, including the Camel brand. Second-quarter profit fell 9.6% to $341 million, or $1.17 a share, as revenue hovered at $2.2 billion. The operating margin remained steady at 29%. Reynolds American's stock trades at a forward earnings multiple of 11, a book value multiple of 2.6 and a sales multiple of 2 -- 18%, 82% and 42% discounts to tobacco industry averages. Of analysts covering Reynolds, 36% rate its stock "buy", 36% rate it "hold" and 28% rank it "sell." A median target of $59.40 suggests a return of 3%.

5.

Altria Group

(MO) - Get Altria Group Inc Report

sells cigarettes, tobacco and wine. Second-quarter profit ascended 3.2% to $1 billion, or 50 cents a share, as revenue declined 5.5% to $4.3 billion. The operating margin extended from 39% to 40%. Altria's stock sells for a forward earnings multiple of 11 and a sales multiple of 2.9 -- 15% and 16% discounts to tobacco peer averages. It's fairly valued based on book value and cash flow per share. Of researchers following Altria, 53% rate its stock "buy" and 47% rate it "hold." A median target of $24.12 implies 4% of upside lies ahead.

4.

Pitney Bowes

(PBI) - Get Pitney Bowes Inc. Report

sells mail processing equipment and services. Second-quarter profit tumbled 48% to $61 million, or 31 cents a share, as revenue declined 5.9%. The operating margin fell from 17% to 16%. Pitney Bowes shares trade at a trailing earnings multiple of 11, a forward earnings multiple of 8.9, a sales multiple of 0.8 and a cash flow multiple of 5.4 -- 56%, 54%, 56% and 52% discounts to peer averages. Around 40% of analysts rate the stock "buy", 40% rate it "hold" and 20% rank it "sell." A median target of $24 suggests a 22% return.

3.

CenturyLink

(CTL) - Get CenturyLink, Inc. Report

is an integrated telecommunications company about to merge in a stock-for-stock deal with

Qwest

(Q)

. Second-quarter net income more than tripled to $239 million, but earnings per share gained a more modest 16% to 79 cents. Revenue more than doubled. The operating margin rose from 28% to 31%. CenturyLink's stock sells for a forward earnings multiple of 11 and a book value multiple of 1.1 -- 19% and 55% discounts to peer averages. Roughly 65% of analysts rate it "buy." A median target of $38.17 implies 6% of upside.

2.

Windstream

(WIN) - Get Windstream Holdings, Inc. Report

sells telecom services in rural areas of the U.S. Its second-quarter profit decreased 13% to $79 million, or 17 cents a share, as revenue stretched 22% to $917 million. The gross margin remained steady at 62%, but the operating margin fell from 33% to 30%. Windstream's stock trades at a premium to peers based on forward earnings, book value and cash flow. Around 55% of analysts following Windstream rate its stock "buy" and the remaining 45% rank it "hold." A median target of $12.75 suggests a 7% climb in the weeks ahead.

1.

Frontier Communications

(FTR) - Get Frontier Communications Corp. Report

sells voice, data and video services to residential, business and wholesale customers. Second-quarter profit increased 26% to $35 million, or 11 cents a share, as revenue contracted 3% to $516 million. The operating margin rose from 28% to 34%. Frontier's stock trades at a premium to peers based on forward earnings, book value and sales. It's cheap based on cash flow per share. Roughly 20% of researchers rate it "buy", 53% rate it "hold" and 27% rank it "sell." A median target of $7.69 implies that the stock is fairly valued.

-- Written by Jake Lynch in Boston.

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