BOSTON ( TheStreet) -- The looming conclusion of the Federal Reserve's QE2, budget tightening and economic-growth downgrades may spark a sell-off in equity markets. And just today, Standard & Poor's imposed a "negative outlook" on the U.S.'s AAA debt rating.

With a number of additional headwinds facing the economy, including a housing market double-dip and elevated unemployment, it's time for stock pickers to adopt a more defensive posture. Dividend stocks, which have been out of favor this year as investors piled into energy and industrial equities, are comparatively safe bets. When screening for yield, most computer programs dismiss so-called special dividends and only incorporate regular quarterly payments. Thus, many high-yielding stocks go unnoticed by yield-seeking investors. Here are three hidden high-yield dividend stocks worth considering. In the pages ahead, they are ordered by yield.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

3. Limited Brands ( LTD) has been a top-performing specialty retail stock over the past few years, returning 30%, annualized, since 2008.

Rapidly improving fundamentals have buoyed the stock. Limited's 12-month sales and net income have grown 11% and 79%, respectively. Limited focuses on women's intimate apparel and beauty-care products, owning the Victoria's Secret and Bath & Body Works brands. Fiscal fourth-quarter net income stretched 27% to $452 million, or $1.36 a share, as sales gained 13%. The operating margin rose from 19% to 21%.

Despite outstanding performance, Limited still receives positive reviews from stock analysts and is reasonably valued, on a comparative basis. Of researchers evaluating the company, 52% recommend purchasing its shares and the remainder suggest holding them. However, the stock's median price target, at $38.59, suggests limited upside from current levels. Limited's stock sells for a trailing earnings multiple of 16, a forward earnings multiple of 14 and a cash flow multiple of 9.5, representing specialty-retail industry discounts of 16%, 8% and 23%, respectively.

Limited pays a regular quarterly dividend of 20 cents, converting to an annual dividend of 2.2%. However, when incorporating special dividends, the stock has a trailing 12-month yield of 9.7%. Incorporating all payouts, the distribution has grown 128% in the past year and 83% and 43% over a three- and five-year span, respectively. Limited declared a special $1 dividend at the end of March 2010, equivalent to a 4% yield on announcement, and a special $3 dividend in December 2010, equal to a 9.4% yield. Management has proven to be exceptionally focused on rewarding shareholders, paying regular quarterly dividends, an annual cash dividend and special dividends, to boot. Although special dividends are contingent upon strong operating results. There are likely more to come.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

2. Diamond Offshore Drilling ( DO) is an oil-and-gas drilling contractor, with expertise in deepwater, harsh-environment and semisubmersible drilling.

Diamond's stock was an indirect casualty of the BP ( BP) Gulf spill as its practices came under scrutiny and the area was closed for further operations. Houston-based Diamond has suffered an annualized share-price drop of 15% since 2008. Its stock has sunk 19% in the past 12 months, but has rallied 15% in 2011 as crude oil surpassed $100 a barrel. Fourth-quarter profit decreased 12% to $242 million, or $1.74 a share, as sales fell 5.6%. The operating margin fell from 50% to 40%, as Diamond's pricing faltered.

Diamond's stock receives lackluster reviews from analysts, with only 16% of those evaluating the company rating its stock "buy." The most bullish firm on Diamond is Goldman Sachs, which expects its stock to advance 29% to $98 within the next 12 months.

Diamond should be watched closely for a pullback. It is already cheap, but may become even cheaper if the long energy trade unwinds. The stock trades at a trailing earnings multiple of 11, a forward earnings multiple of 14 and a cash flow multiple of 8.2, signifying peer discounts of 58%, 32% and 59%, respectively. JPMorgan, which is bearish on Diamond and nearest competitor Transocean ( RIG), fears another potential cut in the dividend, given Diamond's "conservative new build program" and its lack of "exposure to the high spec jackup market."

Diamond pays a quarterly dividend of around 13 cents, translating to an annual yield of just 0.7%. But, it also pays special quarterly dividends, which, admittedly, have fallen from a high of $1.88 in 2010 to 75 cents in the latest quarter. Nevertheless, the stock still offers a forward dividend yield of 4.6%, assuming the 75 cent special distribution is maintained. On a positive note, most of Diamond's fleet is contracted through 2011 and, according to skeptic JPMorgan, day rates are increasing, providing a potential bullish setup for the stock. Although Diamond may suffer further weakness, management is focused on shareholder returns. The dividend has grown 11% and 16%, annually, over a three- and five-year span, respectively.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

1. National Presto ( NPK) has gone largely unnoticed, though, it ranks among the best small-cap dividend stocks. However, with a market value of $738 million, Presto is a little-discussed company, manufacturing small appliances, such as toasters and pressure cookers, defense products, including ammunition, and absorbent products, including diapers. Such a wide variety of seemingly unrelated products has yielded tremendous consistency. Presto has grown sales and net income 4.4% and 18%, annually, on average, over a three-year span.

No sell-side analysts cover Presto's stock, which has delivered annualized gains of 29% since 2008, but has corrected 6.2% in the past 12 months and is down 17% year-to-date. It's now fallen to attractive levels, based on peer valuation and dividend potential, trading at a trailing earnings multiple of 11, a forward earnings multiple of 10 and a book value multiple of 2.1, indicating respective discounts of 41%, 32% and 62% to industry averages. Presto has been ranked "buy" by the quantitative equity model, used by TheStreet Ratings, since April of 2009. It has returned 51% since then, excluding distributions, which are lofty.

Presto pays its dividend at the end of each calendar year, declaring a regular payment and a special dividend on top. Since most screeners don't account for special dividends, it appears that Presto offers a paltry yield of 0.9%, which only accounts for the annual $1 payment from the company. In reality, the yield is upwards of 7%. The distribution has grown 25% and 31%, annually, over a three- and five-year span, respectively. The payout has steadily climbed from $2.45, in 2008, to $7.25, in 2011. The last dividend translated to a yield of 6.3% upon declaration. Presto has an ideal financial position, with $151 million of cash and no debt, for an ample quick ratio of 3.6.

-- Written by Jake Lynch in Boston.

RELATED STORIES:

Become a fan of TheStreet on Facebook.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

If you liked this article you might like

'I Don't Think Ascena Is an Investable Situation': More Squawk From Jim Cramer

'I Don't Think Ascena Is an Investable Situation': More Squawk From Jim Cramer

Here's Why Alliance Data Systems Might Be Up for Sale

Here's Why Alliance Data Systems Might Be Up for Sale

ValueAct May Eye Alliance Data Split to Hike Value

ValueAct May Eye Alliance Data Split to Hike Value

5 Energy Stocks to Buy to Fuel Your Portfolio

5 Energy Stocks to Buy to Fuel Your Portfolio

Are Your Holiday Options Limited?

Are Your Holiday Options Limited?