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Dividend stocks have been a top-performing asset class for the past year. This trend is likely to continue for at least the next couple of years. Demand for dividend stocks is being driven by the need for many investors to find sources of income. Money invested in certificates of deposits, money market accounts and other savings accounts are yielding almost nothing. For investors who can accept some volatility and hold for at least a couple of years, the best solution could be to consider stocks that provide a strong dividend and the possibility for capital gains. The Federal Reserve plans to keep rates extremely low, at least until 2014, so it makes sense to take action now.

The average yield of all stocks in the S&P 500 Index is currently about 1.99%, so the stocks below can be considered to be high-yielding, since these offer yields of at least twice that much.

Investors who employ a "buy on dips" strategy with dividend stocks are likely to achieve higher returns, so it makes sense to buy in stages when these stocks pull back. Here are a number of stocks that offer high yields, reasonable valuations and the potential for capital gains over the next couple of years:

Two Harbors Investment Corp (NYSE:TWO) invests in residential mortgage-backed securities and residential mortgage loans. The company is set up as a real estate investment trust (REIT) that pays out a very high dividend. This stock dropped after the company recently announced a public offering for 30 million shares of common stock. The stock was sold at $9.90 per share, which raised a total of about $297 million. The company plans to use the new capital by acquiring residential mortgage-backed securities, residential mortgage loans and residential real properties, etc. The offering created a pullback in the stock, which is just another buying opportunity for dividend investors. With a dividend yield near 16%, and a book value of about $9.73, this stock looks like a great buy now.

Here are some key points for TWO:
Current share price: $9.97
The 52 week range is $7.72 to $11.51
Earnings estimates for 2011: n/a on Yahoo Finance
Earnings estimates for 2012: n/a on Yahoo Finance
Annual dividend: $1.60 per share which yields 15.6%

Hasbro, Inc. (NASDAQ:HAS) owns many popular toy and game brands such as Tonka, Nerf, Parker Bros., Milton Bradley, and others. Some investors could be concerned that online games and high tech toys might reduce demand for more traditional offerings in the future. However, Hasbro recently announced a deal with Zynga, (NASDAQ:ZNGA) an online game company, to make products based on Zynga's games. These new products are expected to be launched in the Fall of 2012. This is just one way that Hasbro can continue to adapt and grow as the times change. Another challenge could be profit margins as the rising cost of oil will impact the costs of shipping and making plastic toys. However, these concerns appear priced-in already with the stock trading at just about 12 times earnings and offering a dividend yield of almost 4%. The stock is trading close to the bottom of the recent trading range and should be considered on further dips.

Here are some key points for HAS:
Current share price: $35
The 52 week range is $31.36 to $48.43
Earnings estimates for 2011: $2.99 per share
Earnings estimates for 2012: $3.24 per share
Annual dividend: $1.44 per share which yields 4%

RadioShack Corp. (NYSE:RSH) sells electronics, mobile phones, computers, through a chain of over 4,000 stores and about 1,300 kiosks. The company recently warned that the retail environment is challenging, and some investors were disappointed with the fourth quarter results. These concerns caused the stock to drop considerably from about $10.50 per share to just above $7 per share. This company could be viewed as a turnaround candidate, so it would not make sense to invest heavily. However, the yield is compelling, and the company has been considered to be a possible takeover target. A buyout could cause the shares to spike, but expectations are so low that the stock could rise even without a takeover. Radio Shack shares look appealing on dips, especially as the stock currently trades below book value of about $8 per share.

Here are some key points for RSH:
Current share price: $7.23
The 52 week range is $7.13 to $16.70
Earnings estimates for 2011: 66 cents per share
Earnings estimates for 2012: 72 cents per share
Annual dividend: 50 cents per share which yields 6.9%

Pitney Bowes, Inc. (NYSE:PBI) offers a variety of products, services and software which facilitates mail processing and direct mail marketing. There is no question that electronic forms of communication are impacting the volume of mail for the U.S. Post Office and for companies like Pitney Bowes. This company recently reported a 6.5% drop in fourth quarter revenues. Excluding a tax benefit, adjusted earnings per share for the quarter came in at 61 cents. While this company has been hit in the past couple years with a weak economy (which results in less marketing and mailings), it has also been impacted by competition from electronic communications. The growth in email communications will not change, but the next couple of years could be better as the economy grows along with the population base. Those two factors could counteract competition from emails. Since it's too early to tell when and if the company can see revenue growth, it only makes sense to take a small, partial position for now and average in over time. The stock appears undervalued, with a dividend yield of over 8%.

Here are some key points for PBI:
Current share price: $17.80
The 52 week range is $17.33 to $26.36
Earnings estimates for 2011: $2.11 per share
Earnings estimates for 2012: $2.04 per share
Annual dividend: $1.50 per share which yields 8.3%

R.R. Donnelley & Sons (NASDAQ:RRD) offers printing services and specializes in products like catalogs, magazines, forms and labels. The company recently reported a full-year 2011 GAAP loss of 63 cents per diluted share, however, GAAP results included non-cash impairment charges of $531.5 million, or $2.26 per diluted share, for 2011. The company plans to cut costs and add customers in the coming year, which should improve results. R.R. Donnelley expects 2012 full-year earnings per share to be in the range of $1.84 to $1.92. That level of earnings can easily cover the dividend at $1.04 per share annually, so the dividend appears safe, even though it is very generous. It makes sense to buy this undervalued stock on dips. Investors will be well-rewarded to wait for a higher stock price with a dividend yield over 8%.

Here are some key points for RRD:
Current share price: $13.55
The 52 week range is $12.90 to $21.34
Earnings estimates for 2011: $1.84 per share
Earnings estimates for 2012: $1.97 per share
Annual dividend: $1.04 per share which yields 7%

Disclaimer: Data is sourced from Yahoo Finance. No guarantees or representations are made. Hawkinvest is not a registered investment advisor and does not provide specific investment advice. The information is for informational purposes only. You should always consult a financial advisor.

Source: 5 High-Yield Dividend Stocks Worth Buying On Dips