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What follows is a selection of companies from different sectors that have strong dividend yields. We compare the top high-volume defensive plays within telecom, consumer goods, biotechnology, and conglomerates. Both Merck and GE come out on top with a near "strong buy" rating compared to the "hold" rating for AT&T and Altria.

AT&T (T)

AT&T is rated a "hold" on the Street and trades at a respective 15x and 12.1x past and forward earnings while offering a 6% dividend yield. It complements the defensive capital allocation policy with a low beta of 0.6.

Consensus estimates for AT&T's EPS forecast that it will decline by 2.2% to $2.25 in 2011 and then grow by 8.4% and 6.6% in the following two years. Of the 7 revisions to estimates, 6 have gone down for a net change of -0.8%. Assuming a multiple of 15.5x and a conservative 2012 EPS of $2.41, the rough intrinsic value of the stock is $37.36, implying 26.9% upside.

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Altria Group (NYSE:MO)

Altria is rated a "hold" on the Street and trades at a respective 17.2x and 13.1x past and forward earnings while offering a 5.7% dividend yield. It complements the defensive capital allocation policy with a low beta of 0.4.

Consensus estimates for Altria's EPS forecast that it will grow by 7.4% to $2.04 in 2011 and then by 7.4% and 7.8% more in the following two years. Modeling a CAGR of 7.5% for EPS over the next three years and then discounting backwards by a WACC of 9% yields a fair value figure of $30.20, implying 5.4%. While this upside is not strong, the company's strong brands and loyal markets render it a strong defensive play for an uncertain economy.

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Merck (NYSE:MRK)

Merck is rated near a "strong buy" on the Street and trades at a respective 26.6x and 10.1x past and forward earnings while offering a 4.3% dividend yield. It complements the defensive capital allocation policy with a low beta of 0.7.

Consensus estimates for Merck's EPS forecast that it will grow by 9.9% to $3.76 in 2011, grow by 1.9% in 2012, and then decline by 1% in 2013. Assuming a multiple of 13.5x and a conservative 2012 EPS of $3.76, the rough intrinsic value of the stock is $51.17, implying 31.9% upside. Modeling a CAGR of 3.5% for EPS over the next thee years and then discounting backwards by a WACC of 9% yields a fair value figure of $48.86.

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General Electric (NYSE:GE)

GE is rated near a "strong buy" on the Street and trades at a respective 15.5x and 10.7x past and forward earnings while offering a dividend yield of 3.6%. Unlike the other three, GE is relatively volatile - 60% more so than the broader market.

Consensus estimates for GE's EPS forecast that it will grow by 19.1% to $1.37 in 2011 and then by 13.1% and 14.8% in the following two years. Modeling a CAGR of 15.7% for EPS over the next three years and then discounting backwards by a WACC of 9% yields a fair value figure of $22.49, implying 17.9% upside.

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

Source: Defensive Play Roundup: 2 'Holds', 2 Near 'Strong Buys'