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The Gist

These five stocks are S&P 500 U.S. companies with market caps of 2 billion or better which pay dividends yielding at least 5%. What's more, most of these stocks have great stories and positive catalysts for future growth.

Most of these stocks have recent upgrades and positive analyst comments. There may be more volatility in front of us, yet this may be a good entry point to start a position in these high-yield dividend-paying opportunities.

I posit an ideal investing approach for 2013 is to construct a diverse portfolio of stocks with significant capital gain prospects and high dividend yields with the potential to generate money throughout the year. One reason to invest in dividend-paying stocks is they may be the investment of choice to fund the retirement of many Baby Boomers. This may create demand for the stocks covered in this article.

The Goods

In the following sections, we will perform a review of the fundamental and technical state of each company to determine if this is the right time to start a position. The following table depicts summary statistics and Thursday's performance for the stocks.

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CenturyLink, Inc. (CTL)

CenturyLink pays a dividend with a yield of 7.18%. The company is trading 4% below its 52-week high and has 9% upside potential based on the consensus mean target price of $44.27 for the company. CenturyLink was trading Thursday for $40.51, up nearly 1% for the day.

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Fundamental Review

Fundamentally, CenturyLink has some positives. CenturyLink's forward P/E ratio is 15.30 and the company is trading at 1.25 times book value. EPS is up 92% quarter over quarter. The company's revenue growth has surpassed the industry average. Profits and revenues are up and the company has raised guidance.

Technical Review

Technically, CenturyLink is in a solid uptrend. The stock recently broke out above long-term resistance. The coveted golden cross was recently achieved which is a bullish signal.

My Take

I posit the stock will continue to rise based on improving guidance and fundamentals. I believe you are safe starting a position at this level. The stock should run up into earnings on Feb 13th.

Altria Group Inc. (MO)

Altria pays a dividend with a yield of 5.22%. The company is trading 5% below its 52-week high and has 7% upside potential based on the consensus mean target price of $36.09 for the company. Altria was trading Thursday for $33.73, up slightly for the day.

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Fundamental Review

Fundamentally, Altria has some positives. The company has a forward P/E of 14.16. The company has a net profit margin of 15.98% and a ROE of 94.15%.

Technical Review

Technically, Altria just broke out to the upside of a descending triangle formation. This is positive. The golden cross was just achieved as well. The stock looks technically solid.

My Take

Altria just beat earnings estimates. Altria's profits rose nearly 32% due to higher prices for its products. The company also expanded its U.S. market share. You can read the transcript here. I like the stock here.

Pitney Bowes Inc. (PBI)

PBI pays a dividend with a yield of 12.52%. The company is trading 19% below its 52-week high and has 9% upside potential based on the consensus mean target price of $15.67 for the company. PBI was trading Thursday for $14.41, up over 20% for the day.

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Fundamental Review

PBI has some fundamental positives. The company is trading for 48% of sales and has a forward P/E of 6.27. The company's net profit margin is 7.57%. According to Finviz.com, the company has a ROE of 935%. The company is increasing profit margins and cash flow from operations is healthy.

Technical Review

Technically, PBI has been in a long-term down trend for quite some time. Nevertheless, the stock just broke out to the upside after beating earnings on January 31st. The stock is currently overbought with an RSI of 82.

My Take

PBI reported fiscal fourth quarter 2012 earnings results January 31st before the market opened. PBI reported earnings per share from continuing operations of 56 cents. The earnings for the quarter include net tax benefit of 37 cents as a result of an agreement between the company and the IRS. For 2012, the company's earnings per share from continuing operations were $2.18 compared with $2.75 in 2011. You can read the transcript here. I have been bullish on the stock since it hit $11. I would wait a few days for the stock to cool off prior to starting a position though.

AT&T, Inc. (T)

AT&T pays a dividend with a yield of 5.22%. The company is trading 8% below its 52-week high and has 5% upside potential based on the consensus mean target price of $36.37 for the company. AT&T was trading Thursday for $34.87, up nearly 1% for the day.

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Fundamentally Review

Fundamentally, AT&T has some positives. The company has a forward P/E of 12.09. The company has a net profit margin of 5.92%. The company is trading for slightly over two times book value and 21 times free cash flow.

Technical Review

Technically, the stock has just breached long-term resistance. The stock has bounced off the $33 level three times recently. It looks like the bottom is in.

My Take

AT&T reported earnings on January 24th. Fiscal fourth quarter 2012 profits were lower than expected but the telephone company stated earnings and revenue would grow this year even if the economy does not improve. You can read the transcript here. The stock is a buy at the level. The risk/reward favors long trades.

Verizon Communications Inc. (VZ)

Verizon pays a dividend with a yield of approximately 5%. The company is trading 9% below its 52-week high and has 8% upside potential based on the consensus mean target price of $47 for the company. Verizon was trading Thursday for $43.69, up slightly for the day.

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Fundamental Review

Fundamentally, Verizon has some positives. The company has a forward P/E of 13.89. The company has a net profit margin of 9.11%. The company is trading for slightly less than four times book value and 20 times free cash flow.

Technical Review

Technically, Verizon has just broken through long-term resistance. The stock has been hugging the 200 day sma. The stock looks technically bullish here.

My Take

Verizon is well positioned for the telecom revolution. With the proliferation of mobile devices, Verizon stands to make a lot of profits. The stock just broke out above long-term resistance. The risk/reward is favorable at this level. I like the stock here.

The Bottom Line

These dividend-paying stocks have the potential for both capital gains and income production. Boomers will be looking for stocks that have a track record of increasing dividends. This will give them yet another hedge against inflation. This combination of capital gains and income production will be necessary to fund the lengthening retirement that comes with a greater life expectancy.

These stocks have solid long-term growth stories and pay hefty dividends. These facts coupled with the Fed's announcement that the QE program will continue leads me to believe these stocks are set for more upside. Factor this in with the statistic that historically dividend-paying stocks have outperformed non-dividend-paying stocks and you have a recipe for outstanding returns.

We are talking about buying and holding these stocks for the long haul. Since these will be long-term core portfolio holdings, take your time and build your full position slowly. If you choose to start a position in any stock, I suggest layering in a quarter at a time at a minimum to reduce risk.

Source: 5 Buys Yielding 5% Or More Set For Solid Upside In 2013

Additional disclosure: This is not an endorsement to buy or sell securities. Investing in securities carries with it very high risks. The information contained within this article for informational purposes only and is subject to change at any time. Do your own due diligence and consult with a licensed professional before making any investment.