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As the market rally is chugging along, many stocks have advanced to the point where long-term investors see very little value in purchasing shares for the fear that they could be crushed in a market correction. The list in this article has stocks with dividend yields of at least 4% and that are trading for less than 12x TTM earnings. As the Fed is continuing its low-rate expansionary monetary policy, many investors are searching for yield and these dividend stocks should be able to deliver that.

The Fundamentals

Company:Market Cap:Dividend Yield:TTM PE:
BP (NYSE:BP)$140B4.78%6.3x
Lockheed Martin (NYSE:LMT)$33B4.51%11.8x
Sasol (NYSE:SSL)$29B4.43%10.9x

BP $43.96

Ever since the 2010 Deepwater Horizon Oil Spill, there has been a sort of cloud hanging over BP's stock. Whether investors are concerned about potential liabilities from ongoing litigation, or if worries over company operating procedures continue to hurt the stock, there are many reasons why the company should be trading rather higher than where it is today. The company has undergone a significant overhaul of its operations. BP is aiming to be a smaller, more focused oil company and one of the most exciting developments was the sale of its portion of the TNK-BP joint venture in Russia, which had been plagued by troubles for years. Additionally, the earnings valuation on the stock combined with the high dividend yield should draw in value and income-seeking investors, which should help support the stock.

Lockheed Martin $102.01
Since the sequestration in March of this year, there has been a significant battle over the defense stocks. The bulls say that the sequestration was relatively small and that long-term contracts for the major players are still in place. The bears say that the sequestration has the potential to hurt the bottom line of the defense companies and that this could just be the beginning of some sort of austerity from the government, at least in defense. The former seems to make more sense, and defense stocks have rallied since the beginning of March, and Lockheed Martin is up nearly 16% since then. Lockheed is one of the premier defense players in this country that trades for a reasonable valuation with a good dividend yield and should benefit from continued high levels of governmental expenditures on defense.

Sasol $44.22

Sasol, the South African energy giant remains somewhat below radar of many U.S. investors. However, Sasol is known for its successful and scalable Gas-to-Liquids or GTL plants. GTL plants convert Natural Gas feedstock into a cleaner blend of diesel fuel. As Natural Gas is much cheaper than using an Oil feedstock, Sasol is able to benefit from the arbitrage in the disconnect between Oil and Natural Gas prices. Under currents market conditions, Sasol's Oryx GTL plant in Qatar is very profitable and the company has plans to build more plants. Oryx has production capacity of just over 32,000 barrels/day and is a joint venture between the company and Qatar Petroleum. Sasol has plans to construct GTL plants in Nigeria, Uzbekistan and in the United States. Sasol is tentatively planning to construct a plant in Lake Charles, La., that could potentially have capacity of 96,000 barrels/day. Sasol has the potential to be a very meaningful growth story if it completes these projects and if market conditions remain in its favor. The company trades for a very reasonable PE ratio and pays a rather sizable dividend.

Source: 3 High-Yielding Stocks Trading For Reasonable Valuations