Evaluating dividend stocks by dividend yield can be tricky - since dividend yield is dividend/share price, the dividend yield can rise without any increase in dividend. This gives rise to the term "value trap."

For ideas on how to avoid value traps, we ran a screen on high dividend yield stocks for those that have traded higher over the last quarter. However, we also wanted to search for those that could still be undervalued, by looking for those trading at steep discounts to their Graham Number.

The Graham number was created by the "godfather of value investing" Benjamin Graham, and calculates a stock's maximum fair value based off of its EPS and book value per share (BVPS). Stocks trading below their Graham Number may be undervalued.

Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)

*â€ªInteractive Chart: Press Play to compare changes in analyst ratings over the last two years for the top six stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.â€¬*

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Do you think these stocks hold value? Use this list as a starting point for your own analysis.

List sorted by potential upside implied by Graham Number.

* 1. Atlas Pipeline Partners LP (NYSE:APL):* Engages in gathering and processing natural gas. Dividend yield at 5.80%, payout ratio at 7.20%. Diluted TTM earnings per share at 5.15, and a MRQ book value per share value at 23.79, implies a Graham Number fair value = sqrt(22.5*5.15*23.79) = $52.50. Based on the stock's price at $37.52, this implies a potential upside of 39.94% from current levels.

* 2. Norwood Financial Corp. (NASDAQ:NWFL):* Operates as the holding company for the Wayne Bank, which provides various commercial banking products and services to individuals, businesses, nonprofit organizations, and municipalities in Pennsylvania. Dividend yield at 4.60%, payout ratio at 49.02%. Diluted TTM earnings per share at 2.39, and a MRQ book value per share value at 26.81, implies a Graham Number fair value = sqrt(22.5*2.39*26.81) = $37.97. Based on the stock's price at $27.49, this implies a potential upside of 38.12% from current levels.

* 3. Entergy Corporation (NYSE:ETR):* Operates as an integrated energy company in the United States. Dividend yield at 4.79%, payout ratio at 41.72%. Diluted TTM earnings per share at 7.92, and a MRQ book value per share value at 50.92, implies a Graham Number fair value = sqrt(22.5*7.92*50.92) = $95.26. Based on the stock's price at $69.36, this implies a potential upside of 37.34% from current levels.

* 4. SeaCube Container Leasing Ltd. (NYSE:BOX-OLD):* Operates as a container leasing company worldwide. Dividend yield at 6.08%, payout ratio at 47.74%. Diluted TTM earnings per share at 1.88, and a MRQ book value per share value at 10.29, implies a Graham Number fair value = sqrt(22.5*1.88*10.29) = $20.86. Based on the stock's price at $15.5, this implies a potential upside of 34.6% from current levels.

* 5. Dime Community Bancshares Inc. (NASDAQ:DCOM):* Operates as the holding company for The Dime Savings Bank of Williamsburgh that provides financial services and loans primarily for multifamily housing. Dividend yield at 4.02%, payout ratio at 33.92%. Diluted TTM earnings per share at 1.33, and a MRQ book value per share value at 10.49, implies a Graham Number fair value = sqrt(22.5*1.33*10.49) = $17.72. Based on the stock's price at $14.23, this implies a potential upside of 24.51% from current levels.

* 6. Commercial National Financial Corp. (NASDAQ:CNAF):* Operates as a holding company for the Commercial Bank & Trust of PA that provides various commercial banking and trust services primarily in Pennsylvania. Dividend yield at 4.05%, payout ratio at 43.12%. Diluted TTM earnings per share at 2.13, and a MRQ book value per share value at 17.98, implies a Graham Number fair value = sqrt(22.5*2.13*17.98) = $29.35. Based on the stock's price at $25.05, this implies a potential upside of 17.18% from current levels.

* 7. Rimage Corp. (RIMG):* Provides workflow-integrated digital publishing systems that are used by businesses to produce recordable CD, DVD, and blu-ray discs with customized content and durable disc labeling. Dividend yield at 5.26%, payout ratio at 41.77%. Diluted TTM earnings per share at 0.71, and a MRQ book value per share value at 13.67, implies a Graham Number fair value = sqrt(22.5*0.71*13.67) = $14.78. Based on the stock's price at $12.69, this implies a potential upside of 16.45% from current levels.

**BVPS and EPS data sourced from Yahoo Finance, all other data sourced from Finviz.*

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