Do you prefer stocks that pay significant dividend income? For ideas on how to start your search, we ran a screen.

We screened the S&P 500 for stocks paying dividend yields above 2% and sustainable payout ratios below 50%. We then screened for those that appear undervalued relative to the Graham Number.

The Graham Number was created by the "godfather of value investing" Benjamin Graham as a calculation for a stock's maximum fair value. It is based off of a stock's EPS and book value per share (BVPS).

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

The equation assumes that P/E should not be higher than 15 and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.

*Interactive 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.*

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

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

** 1. Archer Daniels Midland Company (NYSE:ADM):** Procures, transports, stores, processes, and merchandises agricultural commodities and products in the United States and internationally. Dividend yield at 2.22%, payout ratio at 28.49%. Diluted TTM earnings per share at 2.27, and a MRQ book value per share value at 27.16, implies a Graham Number fair value = sqrt(22.5*2.27*27.16) = $37.25. Based on the stock's price at $31.96, this implies a potential upside of 16.54% from current levels.

** 2. Best Buy Co. Inc. (NYSE:BBY):** Operates as a retailer of consumer electronics, home office products, entertainment products, appliances, and related services primarily in the United States, Europe, Canada, and China. Dividend yield at 2.51%, payout ratio at 20.66%. Diluted TTM earnings per share at 2.9, and a MRQ book value per share value at 16.13, implies a Graham Number fair value = sqrt(22.5*2.9*16.13) = $32.44. Based on the stock's price at $24.99, this implies a potential upside of 29.82% from current levels.

** 3. Carnival Corporation (NYSE:CCL):** Operates as a cruise and vacation company. Dividend yield at 3.33%, payout ratio at 41.10%. Diluted TTM earnings per share at 2.42, and a MRQ book value per share value at 30.67, implies a Graham Number fair value = sqrt(22.5*2.42*30.67) = $40.87. Based on the stock's price at $29.97, this implies a potential upside of 36.35% from current levels.

** 4. ConocoPhillips (NYSE:COP):** Operates as an integrated energy company worldwide. Dividend yield at 3.42%, payout ratio at 29.05%. Diluted TTM earnings per share at 8.97, and a MRQ book value per share value at 49.56, implies a Graham Number fair value = sqrt(22.5*8.97*49.56) = $100.01. Based on the stock's price at $75.95, this implies a potential upside of 31.68% from current levels.

** 5. Gannett Co., Inc. (NYSE:GCI):** Operates as a media and marketing solutions company in the United States and internationally. Dividend yield at 5.31%, payout ratio at 12.47%. Diluted TTM earnings per share at 1.89, and a MRQ book value per share value at 10.4, implies a Graham Number fair value = sqrt(22.5*1.89*10.4) = $21.03. Based on the stock's price at $15.21, this implies a potential upside of 38.26% from current levels.

** 6. M&T Bank Corp. (NYSE:MTB):** Operates as the holding company for M&T Bank and M&T Bank, National Association that provide commercial and retail banking services to individuals, corporations and other businesses, and institutions. Dividend yield at 3.42%, payout ratio at 44.53%. Diluted TTM earnings per share at 6.35, and a MRQ book value per share value at 66.85, implies a Graham Number fair value = sqrt(22.5*6.35*66.85) = $97.73. Based on the stock's price at $81.77, this implies a potential upside of 19.52% from current levels.

** 7. Northrop Grumman Corporation (NYSE:NOC):** Provides products, services, and solutions in aerospace, electronics, information systems, shipbuilding, and technical service sectors. Dividend yield at 3.34%, payout ratio at 26.03%. Diluted TTM earnings per share at 7.52, and a MRQ book value per share value at 40.71, implies a Graham Number fair value = sqrt(22.5*7.52*40.71) = $82.99. Based on the stock's price at $59.92, this implies a potential upside of 38.51% from current levels.

** 8. Staples, Inc. (NASDAQ:SPLS):** Operates as an office products company. Dividend yield at 2.50%, payout ratio at 28.03%. Diluted TTM earnings per share at 1.37, and a MRQ book value per share value at 10.24, implies a Graham Number fair value = sqrt(22.5*1.37*10.24) = $17.77. Based on the stock's price at $15.28, this implies a potential upside of 16.27% from current levels.

* 9. Sempra Energy (NYSE:SRE):* Engages in the development of energy infrastructure, operation of utilities, and provision of energy-related products and services worldwide. Dividend yield at 3.29%, payout ratio at 32.71%. Diluted TTM earnings per share at 5.55, and a MRQ book value per share value at 40.2, implies a Graham Number fair value = sqrt(22.5*5.55*40.2) = $70.85. Based on the stock's price at $58.04, this implies a potential upside of 22.07% from current levels.

** 10. Molson Coors Brewing Company (NYSE:TAP):** Distributes beer brands. Dividend yield at 2.91%, payout ratio at 29.29%. Diluted TTM earnings per share at 3.63, and a MRQ book value per share value at 42.28, implies a Graham Number fair value = sqrt(22.5*3.63*42.28) = $58.76. Based on the stock's price at $43.92, this implies a potential upside of 33.8% from current levels.

** 11. The Travelers Companies, Inc. (NYSE:TRV):** Provides various commercial and personal property and casualty insurance products and services to businesses, government units, associations, and individuals primarily in the United States. Dividend yield at 2.81%, payout ratio at 47.31%. Diluted TTM earnings per share at 3.37, and a MRQ book value per share value at 62.31, implies a Graham Number fair value = sqrt(22.5*3.37*62.31) = $68.74. Based on the stock's price at $58.6, this implies a potential upside of 17.3% 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.