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In times like these, when stocks are characterized with extreme volatility and global financial turmoil has brought uncertainty around, investors rightly prefer high dividend paying stocks. Stocks with a high dividend yield result in a positive return turn to one's stock portfolio by giving a steady income. However, some high dividend stocks could not escape the market correction recently and underperformed the benchmark. I believe some of these stocks are significantly undervalued and offer unusually high dividend yields. Further, such stocks act as an inflation hedge when companies increase their payouts. But, one should be wary of company's ability to keep paying dividends in future.

Chimera Investment Corporation (NYSE:CIM) is currently yielding dividends at 15.77%, with a payout ratio is 1.08. The profitability of the firm includes profit margins of 9.59%, operating margins of 91.67% and a return on equity of 18.34%. The stock has a low volatility, with the company's current beta factor of 1.27. The company's payout ratio in excess of 100% indicates that it is paying the dividend with borrowed funds at this point, which is not sustainable. Chimera Investment Corporation currently has cash on hand of only $9.8 million, and the dividend payments for the past year were over $500 million. At the same time, revenues and earnings per share have exhibited some improvements on a year-on-year basis. Moreover, dividend payments have shown inconsistencies in the past coupled with low cash levels makes dividend payments unsustainable in the future.

First Niagara Financial Group Inc. (NASDAQ:FNFG) is yielding dividends at 6.68%, with a payout ratio of 0.817. The profitability of the company includes profit margins of 3.64%, operating margins of 33.10%, and a return on equity of 5.46%. The stock has a low volatility with a beta factor of 0.71. The aforementioned figures illustrate how First Niagara is able to continue with the current dividend payout. Current payout, at 81%, has been the highest in the company's history. At the same time consistent earnings growth, along with a track record of regularly paying and raising its dividends, highlight how the company has the ability to continue with the current trends in the dividend payout and will more than likely maintain this in the future.

R.R. Donnelley (NASDAQ:RRD) is yielding dividends of 8.57% with a high payout ratio of 0.967. The profitability of the company includes profit margins of 2.17%, operating margins of 5.54%, and a return on equity of 11.54%. The firm has a high volatility with a beta factor of 1.96. These numbers highlight R. R. Donnelley's ability to continue with its current dividend payout. This is because the firm is continuing with the strong amounts of growth in profit and operating margin. Moreover, the company's free-cash-flow-based payout ratio is considerably lower than the measure based on earnings. As a result, dividend growth will likely continue in the future. This means that the yield could remain the same if not increased. The share also looks attractive on the price-to-book metric of 1.3.

Transocean (NYSE:RIG) is yielding dividends of 7.56% with a payout ratio of 2.0. The profitability of the company includes profit margins of 10.04%, operating margins of 19.49%, and a return on equity of negative 1.9%. Moreover, its earning power is highly variable as it has become a high dividend stock from being a no dividend stock, recently. The stock has a high volatility with a beta factor of 1.04. Furthermore, the company continues to face both internal and external challenges which will keep Transocean's earnings in pressure for the next year leading to further deterioration in its cash flows during 2012. Transocean will likely have to rely on its $2 billion credit line in addition to debt and equity issuances to fund its dividend payout, capital expenditures, and debt maturities in 2012.

Gafisa SA (NYSE:GFA) is yielding dividends at 4.91% with a payout ratio of 0.24. The profitability of the company includes profit margins of 11.82%, operating margins of 15.08%, and a return on equity of 5.92%. The stock has high volatility with a beta factor of 2.52. However, demographics and the future prospects look promising for the company, as compared to its peers. Gafisa SA also pays an above average dividend supported by a payout ratio of less than 50% which is very sustainable. The future growth of the housing market in emerging markets and the present strength of the dividend make Gafisa SA an attractive buy in the depressed Brazilian homebuilding sector.

Source: 3 Stocks That Can Keep Paying Big Dividends, 2 That Can't