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 (ACAS) , 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 (NS) - Get Report , 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( ENSI) 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.

TST Recommends

IndyMac Bancorp( IMB) is the second-highest yielder on the S&P 1500 list, with a yield of 8.5%. Shares of this lender have suffered during the last few months from the general market fallout over adjustable-rate and subprime mortgages. The stock has a P/E of 7 and a PEG of 0.87.

IndyMac is part of the Stockpickr portfolio called Stocks With a PEG of Less Than 1, a list that also includes Morgan Stanley (MS) - Get Report , which has a PEG of 0.59 and a yield of 1.7%, and Chesapeake Energy (CHK) - Get Report , which has a PEG of 0.41 and a small yield of 0.8%.

Another stock on the list of high-yield S&P 1500 stocks is Entercom Communications (ETM) - Get Report , with a yield of 7.3%. Entercom owns and operates radio stations across the country including in the San Francisco, Boston, Seattle, Denver, Sacramento, Portland, Kansas City, Indianapolis and Milwaukee markets. The stock has a P/E of 80.8 and a PEG of 3.8.

Entercom shows up in the Stockpickr portfolio of More High-Yield Stocks You've Never Heard Of, which lists high dividend stocks with relatively unknown names. Other stocks on this list include First Commonwealth Financial (FCF) - Get Report , a bank holding company that yields 5.8%, and TAL International Group (TAL) - Get Report , a container equipment leasing company that also yields 5.8%.

The entire list of the Top 10 Highest-Yielding S&P 1500 Stocks can be found at Stockpickr.com.

At the time of publication, Altucher and/or his fund had no positions in stocks mentioned, although positions may change at any time.

James Altucher is president of Stockpickr LLC, a wholly owned subsidiary of TheStreet.com and part of its network of Web properties, and a managing partner at Formula Capital, an alternative asset management firm that runs a fund of hedge funds. He is also a weekly columnist for The Financial Times and the author of Trade Like a Hedge Fund, Trade Like Warren Buffett and SuperCa$h. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Altucher appreciates your feedback; click here to send him an email.