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What follows is a list of companies that have PE ratios below 12 and dividend yields greater than 3.5%. These companies appear attractive in the sense that they provide an income investment to hedge against a double dip and considerable room for multiples expansion in the event of a recovery. They cover a variety of industries: integrated oil & gas, speciality retailing, REITs, and home construction.

The Street is currently bearish about all of the companies, save Gafisa (NYSE:GFA). Fourth quarter results may be weak, but the company is appropriately de-risking the business by shifting away from Tenda and towards Alphaville. In addition, management is securitizing receivables to further limit cash flow burn. Based on my analysis, however, I find limited upside for all of the companies.

ConocoPhillips (NYSE:COP)

ConocoPhillips is rated a "hold" and trades at 7.9x past and forward earnings with a dividend yield of 3.8%. It has a beta of 1.1.

Consensus estimates for ConocoPhillip's EPS forecast that it will decline by 5.6% to $8.27 in 2012, grow by 7.6% in 2013, and then decline by 8.6% in 2014. Assuming a multiple of 9.5x and a conservative 2013 EPS of $8.84, the rough intrinsic value of the stock is $83.98, implying 19.2% upside. The firm crushed fourth quarter expectations by $0.27 at an adjusted EPS of $2.02. In addition, management sold $1.5B worth of pipeline assets, which will add efficiency.

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RadioShack (NYSE:RSH)

RadioShack is rated a "sell" and trades at a respective 7.5x and 5.5x past and forward earnings with a dividend yield of 6.8%. It has a beta of 1.6.

Consensus estimates for RadioShack's EPS forecast that it will decline by 47.6% to $0.88 in 2011, decline by 5.7% in 2012, and then grow by 9.6% in 2013. 21 revisions have been made downwards for a net change of -25.8%. Assuming a multiple of 10x and a conservative 2012 EPS of $0.79, the rough intrinsic value of the stock is $7.90, implying 6.9% upside. The retailer is experience erosion in ROIC, margins, and demand.

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Annaly Capital (NYSE:NLY)

Annaly Capital is rated a "hold" and trades at a respective 8.9x and 7.5x past and forward earnings with a dividend yield of 13.3%. Assuming a multiple of 9x and a conservative 2012 EPS of $2.21, the rough intrinsic value of the stock is $19.86, implying 16% upside. The firm recently had to cut is dividend yield as a result of faster MBS prepayments.

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Gafisa

Gafis is rated a "buy" and trades at a respective 10.1x and 5.6x past and forward earnings with a dividend yield of 4.1%. It has a beta of 2.5.

Consensus estimates for Gafisa's EPS forecast that it will fall by 60.9% to $0.43 in 2011 and then grow by 79.1% and 46.8% in the following two years. Revisions to estimates have fallen for a net change of -9.5%. Assuming a multiple of 10x and a conservative 2012 EPS of $0.74, the rough intrinsic value of the stock is $7.40, implying 23.7% upside. As I stated earlier, the company's shift over to Alphaville and receivables securitization is being well received by analysts.

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

Source: 4 Cheap Dividend Plays With Limited Upside