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In our recent study we have shown that the average return of high dividend yielding stocks was 13.04% between 1927 and 2009. The dividend stocks beat the overall market by an average of 1.36% per year during this period.

We think that these are risky times for fixed income investors. Ten-year treasuries yield less than 3.5% and the Federal Reserve is pursuing a highly inflationary monetary policy. Legendary investors Warren Buffett, George Soros, and Jim Rogers already voiced their concerns about the Fed’s policy. Warren Buffett thinks investing in long-term bonds is a bad idea. Jim Rogers is certain that commodities will benefit no matter what happens in the world economy. Ray Dalio, the owner of the world’s biggest hedge fund, recommended gold and emerging market securities. John Paulson also recommended that it could be time to sell your low-yielding bonds and replace them with higher-yielding common stocks.

We prepared a list of 14 companies with low P/E ratios and high dividend yields. All companies in this list have a market capitalization above $2 billion, P/E ratio lower than 13, and dividend yield of at least 2%. These 14 stocks returned 14.6% (including dividends) during the past 12 months, beating the government bonds by a large margin.

1. PartnerRe Limited (ADR) (NYSE:PRE): PartnerRe Ltd. is one of the leading reinsurance groups operating worldwide. PRE recently traded at $81.02 and has a 2.59% dividend yield. PRE gained 4.41% during the past 12 months. The stock has a market cap of $5.47 billion and P/E ratio of 7.75.

2. Eli Lilly & Co. (NYSE:LLY): Eli Lilly and Company provides pharmaceutical products worldwide. LLY recently traded at $34.99 and has a 5.6% dividend yield. LLY gained 2.22% during the past 12 months. The stock has a market cap of $38.54 billion and P/E ratio of 7.64.

3. Alliance Resource Partners LP (NASDAQ:ARLP): Alliance Resource Partners, L.P. produces and sells coal to utilities and industrial users in the United States. ARLP recently traded at $81.69 and has a 4.03% dividend yield. ARLP gained 102.15% during the past 12 months. The stock has a market cap of $3 billion and P/E ratio of 12.23.

4. Astrazeneca plc (ADR) (NYSE:AZN): AstraZeneca PLC is one of the leading biopharmaceutical companies operating worldwide. AZN recently traded at $46.6 and has a 5.47% dividend yield. AZN gained 9.18% during the past 12 months. The stock has a market cap of $66 billion and P/E ratio of 8.37.

5. Dominion Resources (NYSE:D): Dominion Resources produces and transports energy in the United States. D recently traded at $44.7 and has a 4.18% dividend yield. D gained 10.34% during the past 12 months. Dominion Resources is also one the 35 Growing Dividend Stocks with Low PE Ratios.

6. L-3 Communications Holdings Inc. (NYSE:LLL): L-3 Communications is one the leading Aerospace / Defense companies operating worldwide. LLL recently traded at $79.1 and has a 2.09% dividend yield. LLL lost -12.66% during the past 12 months. The stock has a market cap of $8.6 billion and P/E ratio of 9.59. Ray Dalio’s Bridgewater Associates has $36 million invested in LLL shares.

7. Lockheed Martin (NYSE:LMT): Lockheed Martin Corporation is one the leading technology companies operating Worldwide. LMT recently traded at $80.98 and has a 3.41% dividend yield. LMT gained 0.19% during the past 12 months. The stock has a market cap of $28 billion and P/E ratio of 10.2. Lockheed Martin is also one the 35 Growing Dividend Stocks with Low PE Ratios.

8. Northrop Grumman (NYSE:NOC): Northrop Grumman is a global aerospace and defense technology company. NOC recently traded at $62.97 and has a 2.99% dividend yield. NOC gained 8.08% during the past 12 months. The stock has a market cap of $18 billion and P/E ratio of 9.23.

9. Telefonica S.A. (ADR) (NYSE:TEF): Telefonica is one the leading multinational communication companies. TEF recently traded at $25.58 and has a 6.84% dividend yield. TEF gained 14.86% during the past 12 months. The stock has a market cap of $115.33 billion and P/E ratio of 8.24.

10. Travelers Companies (NYSE:TRV): The Travelers Companies is a property and casualty insurance company operating primarily in the United States. TRV recently traded at $59.71 and has a 2.41% dividend yield. TRV gained 13.82% during the past 12 months. The stock has a market cap of $25.74 billion and P/E ratio of 9.02. David Einhorn’s Greenlight Capital has $119 million invested in TRV shares.

11. AT&T Inc. (NYSE:T): AT&T Inc. provides telecommunication products and services worldwide. T recently traded at $30.62 and has a 5.52% dividend yield. T gained 24.83% during the past 12 months. The stock has a market cap of $181.01 billion and P/E ratio of 9.15.

12. Chubb Corp. (NYSE:CB): The Chubb Corporation provides property and casualty insurance services. CB recently traded at $61.43 and has a 2.44% dividend yield. CB gained 21.19% during the past 12 months. The stock has a market cap of $18.14 billion and P/E ratio of 9.09.

13. Sunoco Logistics Partners LP (NYSE:SXL): Sunoco Logistics Partners L.P. provides transport, terminalling, and storage of refined products and crude oil in the United States. SXL recently traded at $87.31 and has a 5.27% dividend yield. SXL gained 34.65% during the past 12 months. The stock has a market cap of $2.9 billion and P/E ratio of 9.35. Dan Loeb’s Third Point has $36 million invested in SXL shares.

14. Hudson City Bancorp, Inc. (NASDAQ:HCBK): Hudson City Bancorp provides retail banking services. HCBK recently traded at $9.72 and has a 6.17% dividend yield. HCBK lost -28.27% during the past 12 months. The stock has a market cap of $4.8 billion and P/E ratio of 8.92. Hudson City Bancorp is also one of the 35 Growing Dividend Stocks with Low PE Ratios.



Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 14 Dividend Stocks With Growing Yields and Low P/E Ratios