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Every investor wants competitive returns. To realize this goal, you have to discover really cheap stocks and invest into them when they are on the turning point. One way to find real bargains is to look for stocks with high dividends and low price to earnings ratios. More than 6.800 companies are listed on the U.S. capital market, of which more than a hundred are cheap on the first view. But most of them are not to recommend because they are acting within a really challenging business environment.

A better way to look for stocks with a higher degree of sustainability is to stay focused on stocks from major indices like the Standard & Poor’s 500 index. The index includes 500 leading companies in leading industries of the U.S. economy, capturing 75 percent coverage of U.S. equities. Recently, I analyzed the index by high yielding stocks alone but most of were very expensive with a price multiplier above 15. I screened the S&P 500 by stocks with a divided yield of more than 5 percent (high yield) as well as a very attractive forward price to earnings ratios of less than 10. Exactly 8 stocks remained. These are the results:

1. R.R. Donnelley & Sons (RRD) has a market capitalization of $2.55 billion. The company employs 58,700 people, generates revenues of $10,018.90 million and has a net income of $217.10 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,079.40 million. Here are the price ratios of the company: The P/E ratio is 11.53, Price/Sales 0.28 and Price/Book ratio 1.38. Dividend Yield: 6.98 percent. The beta ratio is 1.96.

2. Hudson City Bancorp (HCBK) has a market capitalization of $2.68 billion. The company employs 1,580 people, generates revenues of $2,784.50 million and has a net income of $537.21 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $2,109.76 million. Here are the price ratios of the company: The P/E ratio is not calculable, Price/Sales 2.14 and Price/Book ratio 0.52. Dividend Yield: 5.84 percent. The beta ratio is 0.76.

3. Federated Investors (FII) has a market capitalization of $1.57 billion. The company employs 1,334 people, generates revenues of $951.94 million and has a net income of $189.16 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $331.59 million. Here are the price ratios of the company: The P/E ratio is 9.74, Price/Sales 1.79 and Price/Book ratio 3.47. Dividend Yield: 5.84 percent. The beta ratio is 0.86.

4. Avon Products (AVP) has a market capitalization of $7.05 billion. The company employs 42,000 people, generates revenues of $10,862.80 million and has a net income of $595.20 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $1,267.90 million. Here are the price ratios of the company: The P/E ratio is 9.64, Price/Sales 0.67 and Price/Book ratio 4.37. Dividend Yield: 5.46 percent. The beta ratio is 1.40.

5. Lockheed Martin (LMT) has a market capitalization of $23.93 billion. The company employs 126,000 people, generates revenues of $45,803.00 million and has a net income of $2,645.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $5,087.00 million. Here are the price ratios of the company: The P/E ratio is 9.28, Price/Sales 0.53 and Price/Book ratio 7.01. Dividend Yield: 5.33 percent. The beta ratio is 0.90.

6. Eli Lilly & Co. (LLY) has a market capitalization of $41.27 billion. The company employs 38,380 people, generates revenues of $23,076.00 million and has a net income of $5,069.50 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $7,793.60 million. Here are the price ratios of the company: The P/E ratio is 8.51, Price/Sales 1.85 and Price/Book ratio 3.42. Dividend Yield: 5.31 percent. The beta ratio is 0.72.

7. Merck & Co. (MRK) has a market capitalization of $101.16 billion. The company employs 90,000 people, generates revenues of $45,987.00 million and has a net income of $982.00 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $9,250.00 million. Here are the price ratios of the company: The P/E ratio is 22.67, Price/Sales 2.32 and Price/Book ratio 1.98. Dividend Yield: 5.1 percent. The beta ratio is 0.66.

8. Pitney Bowes (PBI) has a market capitalization of $3.47 billion. The company employs 30,700 people, generates revenues of $5,425.25 million and has a net income of $328.81 million. The firm’s earnings before interest, taxes, depreciation and amortization (EBITDA) amounts to $951.31 million. Here are the price ratios of the company: The P/E ratio is 9.43, Price/Sales 0.68 and Price/Book ratio is not calculable. Dividend Yield: 8.01 percent. The beta ratio is 1.04.

Disclosure: I am long AVP.

Source: 8 High Yield Stocks From The S&P 500 With Lowest P/E Ratio