Seeking Alpha

Do you prefer stocks that pay dividends you can rely on? We ran a screen with this idea in mind.

We began by screening the S&P 500 for dividend stocks: those paying dividend yields above 2% and sustainable payout ratios below 50%.

Then we screened that universe for those that appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the "godfather of value investing," Benjamin Graham.

It is based off of a stock's EPS and book value per share (BVPS).

Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)

The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.

For an â€ªinteractive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

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Do you think these stocks pay sustainable dividend yields? Use this list as a starting point for your own analysis.

1. AFLAC Inc. (AFL): Provides supplemental health and life insurance. Market cap at \$24.87B, most recent closing price at \$53.03. Diluted TTM earnings per share at 6.07, and a MRQ book value per share value at 34.1, implies a Graham Number fair value = sqrt(22.5*6.07*34.1) = \$68.24. Based on the stock's price at \$52.93, this implies a potential upside of 28.93% from current levels. Dividend yield at 2.64%, payout ratio at 21.83%.

2. BB&T Corporation (BBT): Operates as the financial holding company for Branch Banking and Trust Company that provides banking and trust services to small and mid-size businesses, public agencies, local governments, and individuals in the United States. Market cap at \$21.21B, most recent closing price at \$30.32. Diluted TTM earnings per share at 2.55, and a MRQ book value per share value at 26.88, implies a Graham Number fair value = sqrt(22.5*2.55*26.88) = \$39.27. Based on the stock's price at \$30.31, this implies a potential upside of 29.57% from current levels. Dividend yield at 2.64%, payout ratio at 29.76%.

3. The Chubb Corporation (CB): Provides property and casualty insurance to businesses and individuals. Market cap at \$20.47B, most recent closing price at \$78.15. Diluted TTM earnings per share at 6.89, and a MRQ book value per share value at 60.98, implies a Graham Number fair value = sqrt(22.5*6.89*60.98) = \$97.23. Based on the stock's price at \$77.78, this implies a potential upside of 25.% from current levels. Dividend yield at 2.1%, payout ratio at 22.87%.

4. Chevron Corporation (CVX): Engages in petroleum, chemicals, mining, power generation, and energy operations worldwide. Market cap at \$222.02B, most recent closing price at \$113.44. Diluted TTM earnings per share at 12.19, and a MRQ book value per share value at 67.93, implies a Graham Number fair value = sqrt(22.5*12.19*67.93) = \$136.50. Based on the stock's price at \$111.73, this implies a potential upside of 22.17% from current levels. Dividend yield at 3.17%, payout ratio at 28%.

5. Dell Inc. (DELL): Provides integrated technology solutions in the information technology ((IT)) industry worldwide. Market cap at \$22.88B, most recent closing price at \$13.17. Diluted TTM earnings per share at 1.47, and a MRQ book value per share value at 5.86, implies a Graham Number fair value = sqrt(22.5*1.47*5.86) = \$13.92. Based on the stock's price at \$10.88, this implies a potential upside of 27.96% from current levels. Dividend yield at 2.43%, payout ratio at 5.33%.

6. Kohl's Corp. (KSS): Operates department stores in the United States. Market cap at \$9.83B, most recent closing price at \$42.75. Diluted TTM earnings per share at 4.38, and a MRQ book value per share value at 26.43, implies a Graham Number fair value = sqrt(22.5*4.38*26.43) = \$51.04. Based on the stock's price at \$42.02, this implies a potential upside of 21.46% from current levels. Dividend yield at 3%, payout ratio at 27.54%.

7. Marathon Petroleum Corporation (MPC): Engages in refining, transporting, and marketing petroleum products primarily in the United States and internationally. Market cap at \$21.8B, most recent closing price at \$64.26. Diluted TTM earnings per share at 7.36, and a MRQ book value per share value at 33.83, implies a Graham Number fair value = sqrt(22.5*7.36*33.83) = \$74.85. Based on the stock's price at \$61.99, this implies a potential upside of 20.74% from current levels. Dividend yield at 2.18%, payout ratio at 14.81%.

8. Marathon Oil Corporation (MRO): Operates as an international energy company with operations in the United States, Canada, Africa, the Middle East and Europe. Market cap at \$22.56B, most recent closing price at \$31.93. Diluted TTM earnings per share at 2.55, and a MRQ book value per share value at 25.59, implies a Graham Number fair value = sqrt(22.5*2.55*25.59) = \$38.32. Based on the stock's price at \$32.15, this implies a potential upside of 19.18% from current levels. Dividend yield at 2.13%, payout ratio at 25.73%.

9. SLM Corporation (SLM): Provides education finance in the United States. Market cap at \$8.01B, most recent closing price at \$17.33. Diluted TTM earnings per share at 2.19, and a MRQ book value per share value at 9.47, implies a Graham Number fair value = sqrt(22.5*2.19*9.47) = \$21.60. Based on the stock's price at \$17.37, this implies a potential upside of 24.36% from current levels. Dividend yield at 2.9%, payout ratio at 21.44%.

*BVPS and EPS data sourced from Yahoo! Finance, all other data sourced from Finviz.