20 Dividend Stocks With Yields Up to 18%

These undiscovered dividend stocks offer double-digit yields even as interest rates plummet.
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BOSTON (TheStreet) -- Investors worried about a double-dip recession have flooded into safe-haven fixed-income securities this year. Still, the most attractive yields are in equities. Here are five stocks, representing different industries, that pay dividends significantly higher than the coupons offered by the 30-year Treasury bond. They are ordered by dividend yield, from high to highest. Each description is followed by three similar securities with fat dividends.

5.

Pepco Holdings

(POM)

sells electricity.

Quarter:

Pepco swung to a second-quarter loss of $54 million, but a per share profit of $34 cents, from net income of $25 million, or 18 cents a share, a year earlier. The operating margin extended to 12% from 8.6%. Pepco holds $43 million of cash and $6.1 billion of debt, equaling a debt-to-equity ratio of 1.4.

Stock:

Pepco has advanced 24% in the past 12 months. It trades at a forward earnings multiple of 14, a 10% premium to the industry average. Its cash flow multiple of 3.5 and book value multiple of 0.9 signify 36% and 42% discounts to peer averages. The stock pays a 6.2% yield with a payout ratio of 89%.

Consensus:

Of analysts covering Pepco, four, or 40%, advise buying its shares and six recommend holding them. None say to sell. A median target of $17.58 suggests that the stock is just below fair value.

SunTrust

(STI) - Get Report

offers a target of $18, implying a 3% gain.

Wunderlich Securities

predicts a drop to $17.

Other high-yield utility stocks:

UIL Holdings

(UIL)

, dividend yield: 6.4%

Unitil

(UTL) - Get Report

, dividend yield: 6.5%

Empire District Electric

(EDE)

, dividend yield: 6.5%

4.

Lexington Realty Trust

(LXP) - Get Report

owns office, industrial and retail properties.

Quarter:

The second-quarter loss narrowed to $24 million, or 14 cents a share, from $77 million, or 88 cents, a year earlier. Revenue multiplied to $91 million. The operating margin climbed from negatives to 21%. Lexington has $131 million of cash and $2 billion of debt, equaling a debt-to-equity ratio of 1.7.

Stock:

Lexington has advanced 26% in the past year, beating indices. It sells for a book value multiple of 0.7 and a sales multiple of 2.3 -- 68% and 62% discounts to peer averages. It offers a distribution yield of 6.2%. The trust has suffered nine consecutive quarterly losses. Its portfolio is 92% leased.

Consensus:

Of researchers evaluating Lexington, five, or 56%, advocate buying its shares, three recommend holding and one advises selling. A median target of $7.88 implies 23% of upside.

FBR Capital Markets

(FBCM)

,

KBW

(KBW)

and

Barclays

(BCS) - Get Report

forecast that the REIT will advance 25%, to $8.

Other high-yield property REITs:

Hospitality Properties

(HPT)

, distribution yield: 8.9%

Sun Communities

(SUI) - Get Report

, distribution yield: 9.1%

Mission West

(MSW)

, distribution yield: 9.2%

3.

Frontier Communications

(FTR) - Get Report

is an integrated telecom company.

Quarter

: Second-quarter profit increased 26%, to $35 million, or 11 cents a share, as revenue declined 3%. The operating margin rose to 34% from 28%. Frontier has $357 million of cash and equivalents and $4.8 billion of debt, translating to an ample quick ratio of 1.5, but an excessive debt-to-equity ratio of 18.

Stock:

Frontier has appreciated 8% in the past 12 months, more than the

S&P 500 Index

. It trades at a forward earnings multiple of 17, a 20% premium to its telecom peer average. Its cash flow multiple of 3.3 reflects a 25% discount. Shares pay a 9.9% yield with an elevated payout ratio of 177%.

Consensus:

Of analysts covering Frontier, three, or 21%, advise buying its shares, eight recommend holding and three suggest selling. A median target of $7.72 suggests that the stock is just 2% below fair value. Bullish forecasters

Raymond James

(RJF) - Get Report

and

Stifel Financial

(SF) - Get Report

predict a gain of 32%, to $10.

Other high-yield telecom stocks

:

Windstream

(WIN) - Get Report

, dividend yield: 8.8%

Consolidated Comm.

(CNSL) - Get Report

, dividend yield: 9.3%

Alaska Communications

(ALSK) - Get Report

, dividend yield: 9.7%

2.

Encore Energy Partners

(ENP)

develops oil and gas properties.

Quarter:

Encore swung to a second-quarter profit of $26 million, or 58 cents a share, from a loss of $37 million, or $1.08, a year earlier. The operating margin widened to 30% from 9.4%.

Denbury Resources

(DNR) - Get Report

is the parent company of the general partner. It is considering selling its stake in Encore.

Stock:

Encore has risen 20% in the past year, outpacing indices. It sells for a trailing earnings multiple of 23 and a forward earnings multiple of 15 -- 50% and 17% premiums to peer averages. Its book value multiple of 2 reflects a 48% discount. Encore offers a yield of 11% with a payout ratio of 250%.

Consensus:

Of analysts covering Encore, two, or 40%, rate its stock "buy", two rate it "hold" and one ranks it "sell." A median target of $19.50 implies that the stock is just 5% below fair value.

RBC

(RY) - Get Report

expects the stock to advance 14%, to $21.

UBS

(UBS) - Get Report

forecasts that it will decrease 3%, to $18.

Other high-yield MLPs

:

Vanguard Natural

(VNR)

, distribution yield: 9.1%

Cheniere Energy

(CQP) - Get Report

, distribution yield: 9.7%

Martin Midstream

(MMLP) - Get Report

, distribution yield: 10%

1.

Anworth Mortgage

(ANH) - Get Report

invests in mortgage-backed securities.

Quarter:

Second-quarter profit decreased 24%, to $26 million, or 21 cents a share, as revenue fell 19%, to $54 million. The operating margin remained steady at 94%. The balance sheet holds $71 million of cash and equivalents and $5.1 billion of debt, converting to an excessive debt-to-equity ratio of 5.6.

Stock

: Anworth has fallen 7% in the past 12 months, lagging behind benchmarks. It trades at a forward earnings multiple of 7.1, a book value multiple of 0.9 and a sales multiple of 3.4 -- 87%, 60% and 45% discounts to REIT industry averages. The shares offer a distribution yield of 14% with a payout ratio of 97%.

Consensus

: Of researchers evaluating Anworth, 10, or 83%, rate it "buy" and two rank it "hold." None rate Anworth "sell." A median target of $7.91 implies 14% of upside.

Deutsche Bank

(DB) - Get Report

expects the REIT to gain 23%, to $8.50.

Credit Suisse

(CS) - Get Report

and

Macquarie

(MQBKY)

project a climb of 16%, to $8.

Other high-yield mortgage REITs

:

Two Harbors

(TWO) - Get Report

, distribution yield: 16%

Cypress Sharpridge

(CYS)

, distribution yield: 18%

Chimera

(CIM) - Get Report

, distribution yield: 18%

-- Reported by Jake Lynch in Boston.

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