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The forward P/E is similar to the current P/E Ratio except that it uses forecasted earnings instead. This a great tool for investors to get a better picture of what Wall Street analysts are expecting from a firm in the future. If earnings are expected to increase the forward P/E will be lower than the current P/E.

Financial leverage, also known as the equity multiplier, illustrates how a firm is financing its assets. The lower the number the more a firm is financing its assets through stockholder equity. The higher this metric is the more a firm is relying on debt to finance its assets.

We ran a screen for expensive dividend stocks (forward P/E Ratio>20). From this narrowed pool we looked for companies that use a high degree of financial leverage (X>5).

The operating profit margin lists the firms from highest to lowest:

1. Fibria Celulose SA. (FBR)

Sector

Basic Materials

Industry

Paper & Paper Products

Market Cap

$4,394M

Beta

2.93

The company is based in Brazil, which offers paper products and pulp. The firm’s forward P/E is 92.59. FBR’s Financial Leverage is 1.80. The company’s dividend yield is 3.59%. The short interest was N/A as of 08/31/2011.

2. Simon Property Group Inc. (SPG)

Sector

Real Estate

Industry

REIT - Retail

Market Cap

$35,108M

Beta

1.64

The company is a REIT that develops, owns, and manages primarily retail real estate. The firm’s forward P/E is 38.76. SPG’s financial Leverage is 5.17. The company’s dividend yield is 2.68%. The short interest was 4.40% as of 08/31/2011.

3. Automatic Data Processing. (ADP)

Sector

Industrials

Industry

Business Services

Market Cap

$24,836M

Beta

0.64

The company offers a variety of business outsourcing solutions. The firm’s forward P/E is 16.67. ADP’s financial leverage is 5.70. The company’s dividend yield is 2.84%. The short interest was 1.50% as of 08/31/2011.

4. HDFC Bank Ltd. (HDB)

Sector

Financial Services

Industry

Banks - Regional - Asia

Market Cap

$24,238M

Beta

1.43

The company is based in India and offers wholesale banking, retail banking, along with treasury operations. The firm’s forward P/E is 17.27. HDB’s financial leverage is 8.33. The company’s dividend yield is 0.70%. The short interest was N/A as of 08/31/2011.

5. Kinder Morgan, Inc. (KMI)

Sector

Energy

Industry

Oil & Gas Midstream

Market Cap

$21,613M

Beta

N/A

The firm’s forward P/E is 22.03. KMI’s financial leverage is 8.45. The company’s dividend yield is 1.65%. The short interest was 5.80% as of 08/31/2011.

6. Brookfield Asset Management In. (BAM)

Sector

Real Estate

Industry

Real Estate - General

Market Cap

$17,654M

Beta

1.45

The company is an asset manager that focuses on power, property, and infrastructure assets. The firm’s forward P/E is 18.73. BAM’s financial leverage is 5.47. The company’s dividend yield is 1.84%. The short interest was N/A as of 08/31/2011.

7. Williams Partners LP. (WPZ)

Sector

Energy

Industry

Oil & Gas Midstream

Market Cap

$16,261M

Beta

1.23

The company owns and operates a wide portfolio of energy assets. The firm’s forward P/E is 15.63. WPZ’s financial leverage is 5.72. The company’s dividend yield is 5.07%. The short interest was 4.20% as of 08/31/2011.

8. El Paso Corporation. (EP)

Sector

Energy

Industry

Oil & Gas Integrated

Market Cap

$14,789M

Beta

1.30

The company operates in the regulated natural gas transmission industry. The firm’s forward P/E is 15.20. EP’s financial leverage is 5.77. The company’s dividend yield is 0.21%. The short interest was 2.80% as of 08/31/2011.

9. Marriott International, Inc. (MAR)

Sector

Consumer Cyclical

Industry

Lodging

Market Cap

$10,097M

Beta

1.57

The company franchises and operates a chain of hotels and related facilities. The firm’s forward P/E is 16.81. MAR’s financial leverage is 7.74. The company’s dividend yield is 1.31 %. The short interest was 6.40% as of 08/31/2011.

10. Clorox Company. (CLX)

Sector

Consumer Defensive

Industry

Household & Personal Products

Market Cap

$9,040M

Beta

0.35

The company produces and sells a wide variety of well known consumer products. The firm’s forward P/E is 15.55. CLX’s financial leverage is 33.53. The company’s dividend yield is 3.27 %. The short interest was N/A as of 08/31/2011.

We hope this list helps as investors do their own due diligence on dividend stocks.

Source: 10 Overvalued Dividend Stocks Running On High Leverage