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The recent pullback in the markets worldwide has created the scenario where one can find high dividend yielding stocks with low valuations outside the traditional sectors of utilities, consumer staples and pharmaceutical companies. Two companies that demonstrate this recent trend are Embraer and Microchip Technologies.

Embraer (ERJ)

Embraer S.A. engages in the development, production, and sale of jet and turboprop aircraft for civil and defense aviation markets. It also offers aircraft for agricultural use; structural components, mechanical and hydraulic systems, and technical activities related to the production and maintenance of aerospace material.
Business description from Yahoo Finance

5 reasons to buy ERJ at $25 a share:

  1. Embraer has a solid balance sheet and yields approximately 4.25%.
  2. It has consistently beat earnings estimates each of the last four quarters and consensus EPS estimates for 2011 and 2012 have risen in the last three months.
  3. It is selling in the bottom quarter of its five year valuation range based on P/B, P/E, P/S and P/CF.
  4. Embraer is expected to grow revenues north of 12% in 2012 and it is selling at a five year projected PEG of .81.
  5. The median analyst price target on Embraer is $40 and Standard &Poor’s target on ERJ is $36.

Microchip Technology (MCHP)

Microchip Technology Incorporated, together with its subsidiaries, develops, manufactures, and sells semiconductor products for various embedded control applications.
Business description from Yahoo Finance

5 reasons to recommend MCHP at $33 a share:

  1. MCHP yields 4.2% and has grown its dividend payout by over 6% annually on average over the past five years.
  2. It is selling near the bottom quarter of its five year valuation range based on P/B, P/E, P/S and P/CF.
  3. It recently bounced off long term technical support (click on image to enlarge).
  4. It has managed to beat earnings estimates each of the last four quarters and has a pristine balance sheet with approximately $6 in net cash per share on its books.
  5. Credit Suisse (CS) has a price target on MicroChip Technology of $40 a share and the mean analyst price target on MCHP is $38 a share.
Source: 2 High Yielding Stocks Outside Of The Traditional Dividend Paying Sectors