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Today we are going to analyze five dirt-cheap dividend kings for 2011. Although these stocks attract the attention of corporate raiders and have a tendency to shoot up overnight sometimes, investing in underpriced stocks often requires much patience.

Our analysis includes two companies from the domestic telecom industry, a drug manufacturer, a foreign telecom company, and a major integrated oil & gas pick.

AT&T, Inc. (NYSE:T) stock is seeing downward price shifts over the last two months. The highest price traded for T was on December 24, 2007, at $42.44, and the lowest price recorded was at $22.42 (over the last 5 years). Currently, the stock sells at around $28, which is very cheap for this dividend king.

We know that the acquisition of T-Mobile - owned by Deutsche Telecom (OTCQX:DTEGY) - by AT&T is under review from regulatory agencies. But the U.S. Department of Justice sued to stop the pending acquisition, which is one of the main reasons for T's stock price decline. On the other hand, Google’s (NASDAQ:GOOG) acquisition of Motorola Mobility (NYSE:MMI) is the talk of the technology industry, which also affected telecom industry share prices lately.

T’s profit margin of 16.24% is quite impressive vs. VZ’s of only 5.91%. T has ensured an 18.23% return on equity up until now, which is 2% more than that of VZ. T’s price-to-earnings ratio of 8.17 is efficient enough where the industry demonstrates one of around 22. T’s earnings per share is 3.44, and it has a strong history of increasing its dividend; the dividend has been doubled in the last 15 years, resulting in a current dividend payout ratio of 50.0% and a current yield of 5.9%. Hence, AT&T is definitely one cheap stock you should consider for your retirement portfolio.

Sanofi-Aventis (NYSE:SNY) stock has been trading in a 52-week volatile range of $29.66 to $40.75. The stock last traded at $32.70 (on Friday) and has a 5-year high $48.24 highest in last five years.

Sanofi-Adventis is a highly regarded French pharmaceutical company that has produced blockbuster drugs such as Plavix and Ambien. Berkshire Hathaway (NYSE:BRK.A) owns 4,063,675 shares of SNY. SNY's earnings per share of 2.34 is the highest of any drug manufacturing company. Its price-to-earnings ratio is quite impressive at 14.96, the lowest among its competitors. The PE/G ratio indicates, however, how overvalued the stock is: It comes in at -42.76, where the industry average is just 1.10. Competitor GlaxoSmithKline's (NYSE:GSK) stock is somehow almost properly valued at 0.65, causing a negative effect on SNY. Operating margin of SNY at 22.16% is above what the actual industry demonstrates, but less than GSK's. Payout ratio for SNY is 79%. It has increased its dividend payout in each of the last three years. The dividend yield of 3.6% is not quite lucrative, so I rate the stock as a hold. However, purchasing the stock with the intent of holding long-term will also prove fruitful.

Verizon Communications Inc. (NYSE:VZ) – In a landscape where Sprint Nextel Corp. (NYSE:S) is struggling to compete (and a network upgrade should up its profit margin by 10% over the next few years) and AT&T may reaches 132 million subscribers by acquiring T-Mobile, Verizon (VZ) is efficiently delivering cost-effective services to its nearly 100 million subscribers.

VZ stock traded in a 52-week range of $29.69 to $38.95. Ist highest price of $45.60 was recorded on October 22, 2007. Its current price is $35.24.

VZ's price-to-earnings ratio, at 15.95, is more relevant to the industry, but not as efficient as AT&T's. If we analyze more accurately, VZ is perfectly valued at 1.85 of its PEG ratio, which is equal to the industry, where T seems overvalued at 3.15. Profit margin and return on equity of VZ are 5.91% and 16.23%, respectively. Verizon is yielding earnings per share of $2.23, which is better than industry average.

Shares of Verizon have dropped from $38.61 to $33.12 in the past five months, and the stock is now considered cheap and attractive, with a payout ratio of 102.0% and a yield of 5.50%, to rational investors. Moreover, for the fifth consecutive year, VZ's board approved a 2.6% increase to its quarterly dividend. I rate Verizon stock as a buy.

Telefonica, S.A. (NYSE:TEF) stock has been trading in a 52-week range of $18.63 to $27.61. The stock is selling at around $20 of late, and would make a cheap addition to many portfolios.

The recent economic downturn in Spain forced TEF's estimate of its operating margin to decline over the next three years from 38% earned in 2010. But the company expects an operating margin of between 30% and 40% at any cost. Hopefully the revenue decline in Spain is compensated for by its Latin American region business unit. TEF expects its annual revenue will grow at least 1% to 4% for next three years.

TEF has high return on equity, payout ratio and yield of around 40%, 182% and 8.60%, respectively. Its price-to-earnings ratio of 6.62 is the lowest among its competitors, including VOD, AMX and BT, demonstrating a cheap price; current earnings-per-share of $3.02 is twice the industry average. Most importantly, the five-year expected PEG ratio of TEF at -3.35 is too undervalued. I rate Telefonica S.A. as a buy.

Eni S.p.A. (NYSE:E) stock saw a downward shift in price last week: It sold at $36.85 Friday, quite cheap for a major integrated oil & gas company with a 52-week range of $33.93 to $53.80.

Eni S.p.A., an Italian oil giant, faced a temporary crisis when Libyan natural gas pipeline Greenstream was shut down and remained inoperative. Chief Executive Paolo Scaroni of Eni said in an interview that the company hopes to reopen the Greenstream pipeline. Scaroni is confident that Eni can get its Libyan oil and gas fields up and running pretty quickly, perhaps by the end of the 2012.

E’s earnings per share of $4.71 is less than that of XOM. Its price-to-earnings ratio of 7.90 is efficient enough among competitors and the industry a as whole, and its PEG ratio is 0.96. Eni boasts attractive profit margin and return on equity of 5.80% and 13.24%, respectively. Plus, recent payout ratio and dividend yield recorded for E are 59.0% and 5.60% respectively. Eni S.p.A., a dirt-cheap dividend stock, can certainly be rated as a buy.

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

Source: 5 Dividend Kings For Income Portfolios