10 Dividend Stocks Still Paying Outsized Yields (Update2)

(Story updated to add that Goldman Sachs upgraded Enbridge Partners to "neutral" from "sell" on Wednesday.)

BOSTON ( TheStreet) -- It's apparently going to take a prolonged stock market rally with no corrections to get investors back into equities this year. Their risk-averse posture has them cowering in bonds, despite the Dow Jones Industrial Average's close above 13,000 and the S&P 500's best February performance in 14 years.

That means the average investor is likely missing out, once again, on gains that could make up for the losses of the past few years. One way to stick a toe back in the market is to buy stocks of financially strong companies with high, growing dividends.

But investors clearly like the safe haven that bonds offer, as they did last year, despite their historically low yields, because 2011's slim 2.1% gain after a year-long roller-coaster ride has turned many into nervous nellies.

Indicative of that, the Investment Company Institute said Wednesday that in the five weeks through Feb. 22, investors poured $38.8 billion into bond funds, but a mere $5 billion into equity mutual funds.

And that's despite the stock market rally. S&P 500 stocks have an average total return of 9.5% this year, including a yield of 2.1%. In comparison, one of the biggest bond funds, the top-ranked Pimco Total Return ( PTTRX), has a total return of 2.92%.

Logic would tell you that high-quality stocks with steady dividends would probably be the place that investors should be, since they offer both the chance for share-price appreciation and big yields.

And given that dividends accounted for about 45% of the S&P 500's return over the past 80 years, such stocks' long-term appeal should be unquestioned.

So we screened Morningstar's database for shares of companies with a market value of over $5 billion, financial fundamentals grades of B or better (per Morningstar's analysis), strong long-term growth prospects and the highest current dividend yields.

Here are 10 of those stocks with projected yields ranging from 5.38% to 7.78%, ranked in inverse order of yield:

10. Exelon ( EXC)

Company profile: Exelon, with a market value of $26 billion, is the largest nuclear plant operator in the U.S., and has regulated and unregulated electricity and natural gas distribution units. It is expected to complete a merger with Consolidated Energy ( CEG) in the current quarter, which will result in the largest competitive energy producer in the country and second-biggest electricity and natural gas distributor.

Exelon said today that its proposed merger with Constellation Energy has been approved by the Maryland Public Service Commission. It has already been approved by both companies' shareholders, the New York Public Service Commission, the Public Utility Commission of Texas, the Department of Justice, and the Nuclear Regulatory Commission. Approval from the Federal Energy Regulatory Commission is still pending.

Dividend Yield: 5.38%

Investor takeaway: Its shares are down 8.8% this year and are down by 1.4% annually, on average, over the past three years, but clearly its shares are expected turn around soon as analysts give them five "buy" ratings, two "buy/holds," and 12 "holds," according to a survey by S&P. Investors must be waiting for the dust to clear after the big merger.

9. Health Care REIT ( HCN)

Company profile: Health Care REIT, with a $10 billion market value, is an independent equity real estate investment trust that acquires and develops and manages health-care-industry real estate.

Dividend Yield: 5.40%

Investor takeaway: Its shares are up 0.8% this year and have an annual gain of 27%, on average, over the past three years. Analysts give them 10 "hold" ratings, a survey by S&P shows. It is expected to earn $1.31 per share this year and that will grow by 19% next year.

8. Altria Group ( MO)

Company profile: Altria, with a $62 billion market valuation, is the leading seller of cigarettes and smokeless tobacco in the U.S., and the No. 2 seller of cigars. Its businesses include Philip Morris USA, U.S. Smokeless Tobacco Co. and Ste. Michelle Wine Estates. It also owns a 27% interest in SABMiller ( SAB), the world's second-largest brewer.

Dividend Yield: 5.46%

Investor takeaway: Its shares are up this 1.3% year and 31% annually, on average, over the past three years. S&P has them rated "buy," and its survey of analysts found three "buys," three "buy/holds," 10 "holds," and one "weak hold."

7. AT&T ( T)

Company profile: AT&T, with a market value of $181 billion, is the second-biggest U.S. wireless carrier and dominant local phone company in 22 states, serving about 40 million phone lines, 16 million Internet users and 4 million television customers.

Dividend Yield: 5.70%

Investor takeaway: Its shares are up 2.4% this year but have a gain of 14.4%, on average, over the past three years. Analysts give them nine "buy" ratings, four "buy/holds," 22"holds," and one "sell," according to a survey by S&P. It's expected to earn $2.36 per share this year and that that will grow by 7% next year.

6. AstraZeneca ( AZN)

Company profile: AstraZeneca, with a market value of $60 billion, sells branded pharmaceutical products across several major therapeutic classes. Less than 40% of its sales come from the U.S.

Dividend Yield: 6.20%

Investor takeaway: Its shares are up 1.6% this year but have a gain of 19%, on average, over the past three years. Analysts give them one "buy" rating, one "buy/hold," six "holds," and one "weak hold," per S&P.

5. Southern Copper ( SCCO)

Company profile: Southern Copper, with a market value of $28 billion, is one of the world's largest copper producers with operations in Peru, Mexico and Chile.

Dividend Yield: 6.2%

Investor takeaway: Its shares are up 11% this year and have an annual gain of 41%, on average, over the past three years. Analysts give them two "buy" ratings, three "buy/holds," seven "holds," two "weak holds," and two "sells," S&P says.

4. Enbridge Energy Partners LP ( EEP)

Company profile: Enbridge Energy Partners, with a $7.4 billion market value, is one of the largest crude-oil transporters in North America operating the world's longest crude pipeline, which stretches 3,300 miles from the Canadian oil fields to Chicago, and beyond.

Dividend Yield: 6.58%

Investor takeaway: Its shares are down 0.87% this year but have a gain of 39%, on average, over the past three years. Analysts give them four "buy" ratings, one "buy/hold," 10 "holds," and one "weak hold," according to a survey by S&P. It's expected to earn $1.52 per share this year, 9% more than last year. Goldman Sachs ( GS) upgraded Enbridge Energy to "neutral" from "sell" on Wednesday with a price target of $34, up from $30, because of better growth prospects due to increasing oil pipeline flows and improving liquefied natural gas liquids (NGL) prices. Its shares are currently trading at $32.58.

3. Buckeye Partners ( BPL)

Company profile: Buckeye Partners, with a market value of $6 billion, owns and operates over 6,000 miles of refined petroleum pipelines and storage terminals in the U.S. and internationally. Its pipelines link up with refineries, other companies' pipeline and storage facilities, and airports.

Dividend Yield: 6.94%

Investor takeaway: Its shares are down 4% this year but have a gain of 22%, on average, over the past three years. Analysts give them four "buy" ratings, four "buy/holds," four "holds," and two "sells," S&P says. Earnings this year are expected to be $3.31 per share and grow by 10% next year.

2. Linn Energy ( LINE)

Company profile: Linn Energy is a master limited partnership that acquires and produces from U.S. oil and natural gas properties.

Dividend Yield: 7.29%

Investor takeaway: > Its shares are up 1.7% this year and 45%, on average, over the past three years. Analysts give them nine "buy" ratings, two "buy/holds," and two "holds," per S&P. Earnings this year are expected to grow 19% to $2.16 per share.

1. Boardwalk Pipeline Partners ( BWP)

Company profile: Boardwalk Pipeline Partners, a master limited partnership with a $6 billion market value, invests in and develops natural gas pipelines and storage facilities.

Dividend Yield: 7.78%

Investor takeaway: Its shares are up 0.36% this year and 16%, on average, over the past three years. It's expected to earn $1.36 per share this year and that will grow by 8% next year. Analysts give the stock three "buy" ratings, one "buy/hold," nine "holds," two, "weak holds," and one "sell," according to a survey of analysts by S&P.

>>To see these stocks in action, visit the 10 Dividend Stocks Still Paying Outsized Yields portfolio on Stockpickr.
Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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