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Given the low interest rate environment, it’s generally a good idea to be overweight on dividend stocks. The best argument for buying dividend stocks is that companies that pay good dividends would expect higher profitability in the future. Here’s a basket of stocks that pay solid dividends and trade at inexpensive earnings multiples. This group is definitely a good recipe for security and future returns.

Total S.A. (NYSE:TOT)

Total is a French-based, fully integrated oil company. The company operates on a global scale. It is engaged in the exploration and production of natural gas, refinery and shipping of crude and petroleum products. On the side, it has interests in coal and power generation assets. It directly competes with other integrated global oil companies like BP Plc (NYSE:BP) and Chevron Corp (NYSE:CVX). For the year, shares of Total have declined by 12%. The underperformance is in line with other global oil companies. Most of these stocks track the performance of oil prices. Investors are concerned that oil prices will go for a free fall on fears of a global recession.

Investors should take assurance from solid long term demand of oil. This creates an opportunity for investors from market’s short term focus. At the current price of $46.92, Total is trading at 6.30 times next year’s earnings. It also carries a dividend yield of 2.90%. In contrast, CVX trades at 7.10 times earnings and has a 3.30% dividend yield. Meanwhile, BP trades lower at 5.4 times earnings and carries a dividend yield of 4.50%. The main attraction of Total as an investment is that it is aggressively pursuing growth. It has been acquiring stakes in other parts of the globe to become a leader in the natural gas space. It seems that the current valuations give investors free options on growth.

VimpelCom Ltd (NASDAQ:VIP)

VimpelCom is an integrated telecommunications provider based in Russia. It provides various fixed, wireless and broadband services in Russia, Ukraine, Kazakhstan, Uzbekistan, Vietnam, Laos, Cambodia, etc. Its shares have fallen by 35.77% for the year. The reason is that its market is mostly in Europe. Investors are also concerned that the higher interest charges from its debt have weighed heavily on the profitability of the company. However, the recent quarterly reports showed that the core operations are growing and subscriber growth remains intact.

The stock is currently valued at 6.05 times forward earnings and has a dividend yield of 4.50%. Other European telecommunications stock trade higher than this. France Telecom (FTE) trades at 8.36 times earnings and carries a dividend yield of 8.10%. On the other hand, Vodafone Group (NASDAQ:VOD) is valued at 8.41 times earnings and has a dividend yield of 7.30%. The company has good track record in profitability and cash flow generation. Once it decided to reduce its debt, there’s a good reason why the market will be interested in giving VIP a premium valuation. Its expansion and acquisition with smaller telecommunications company will also give a boost to its shares.

MFA Financial Inc. (NYSE:MFA)

MFA Financial Inc. is a mortgage REIT stock engaged in the investing of residential agency and non-agency mortgage backed securities. For the year, shares of MFA have declined by 23%. This is in line with the performance of similar mortgage REIT stocks. For example, shares of Chimera Investment Corp. (NYSE:CIM) and Two Harbors Investment Corp. (NYSE:TWO) have declined by 14% and 8% respectively. The main risk of non-agency mortgage REIT is the possibility of no payment and reduced valuations. In fact, market is already implying a likelihood that it will default.

At the current price of $6.27, the stock is trading at 6 times next year’s earnings and carries a dividend yield of 15.90%. CIM trades at 5.32 times earnings and has a dividend yield of 19.50%. Meanwhile, TWO is valued at 2 times earnings and carries a dividend yield of 17.80%. At these valuation levels, investors are suggesting that thing will not turnaround soon. The advantage of MFA is that it has proven itself to be resilient in the past interest rate cycles. However, the risk-averse investor can play this sector by buying a balanced and diversified mortgage REIT stocks that carries high dividend yield.

American Capital Agency Corp. (NASDAQ:AGNC)

American Capital Agency Corp. is another mortgage REIT stock worth looking. Shares of AGNC have declined by 7.58% for the year. The reason is that the Federal Reserve’s Operation Twist has created tightening of the interest rate spreads. This will eventually lead to lower profits for mortgage REIT stocks. Another concern for investors is that the US housing market has not picked up significantly. Since AGNC is an agency mortgage REIT, credit risk is mitigated. Investors should focus on prepayment risk and interest rate risk.

The stock is currently trading at 3.80 times earnings and carries a dividend yield of 20%. The argument for high dividends is that it may be unsustainable. In the case of AGNC, the company has consistently paid its dividends. In fact, it is one of the few mortgage REIT stocks that announced an increase in their quarterly dividends. In contrast, Invesco Mortgage Capital (NYSE:IVR) trades at 3.43 times earnings and has a dividend yield of 27%. Annaly Capital Management Inc. (NYSE:NLY) is valued at 5.41 times earnings and a 15.50% dividend yield. The strong case for AGNC is its solid management team. Its management is conservative and focused on risk management. As mentioned in my previous write up on MFA, the best way to play this sector is a diversified portfolio of mortgage REIT stocks.

Life Time Fitness Inc. (NYSE:LTM)

Life Time Fitness is a multi-use sports and athletic company. It is mostly located in the residential, business and shopping districts of a target community. Based on the latest quarterly report, it is currently operating 90 centers in residential locations across 20 states. The company provides use of its resort-like facilities for a fixed monthly fee. For the past 5 years, it has grown its revenues by 18.53% and earnings per share by 12%. The impressive growth is due to aggressive client acquisition of the company. For the year, shares have declined by 6%. The reason is that recessionary fears will have an impact on the discretionary spending of consumers. This will have a huge impact on the profitability of leisure stocks.

The stock is currently trading at 14.33 times next year’s earnings and 1.74 times book value. This is significantly lower than other similar stocks in the industry. Town Sports International Holdings (NASDAQ:CLUB) is valued at 68 times earnings. Given their leadership in the industry, it would be no surprise that earnings will be higher in the future. The overhang of this stock is the current macroeconomic environment. Investors will not touch a stock that is dependent on the uptick of the economy. Once the economy picks up speed, shares of LTM could test its historic highs.

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

Source: 5 Cheap Dividend Stocks To Consider