If you use dividend yield to gauge how large a stock's dividend payment is, it's important to watch out for value traps. These are stocks that may appear to hold a lot of value with a large dividend yield, but in fact the yield has risen simply because the stock price has recently fallen.

For ideas on how to avoid these names, we ran a screen on dividend stocks with yields above 4%, 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 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, or their maximum fair value, may be undervalued. This could indicate that the stocks have more value to price in.

*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.

(Click chart for more detail)

Do you think these stocks are value traps, or do they have more value to price in? Use this list as a starting point for your own analysis.

** 1. Public Service Enterprise Group Inc. (NYSE:PEG):** Operates in the energy industry primarily in the northeastern and mid Atlantic United States. Dividend yield at 4.70%, payout ratio at 49.25%. Diluted TTM earnings per share at 2.96, and a MRQ book value per share value at 20.3, implies a Graham Number fair value = sqrt(22.5*2.96*20.3) = $36.77. Based on the stock's price at $30.96, this implies a potential upside of 18.76% from current levels.

** 2. CenterPoint Energy, Inc. (NYSE:CNP):** Operates as a public utility holding company in the United States. Dividend yield at 4.20%, payout ratio at 43.68%. Diluted TTM earnings per share at 3.17, and a MRQ book value per share value at 9.91, implies a Graham Number fair value = sqrt(22.5*3.17*9.91) = $26.59. Based on the stock's price at $19.31, this implies a potential upside of 37.68% from current levels.

** 3. Entergy Corporation (NYSE:ETR):** Operates as an integrated energy company in the United States. Dividend yield at 4.97%, payout ratio at 43.74%. Diluted TTM earnings per share at 7.55, and a MRQ book value per share value at 50.81, implies a Graham Number fair value = sqrt(22.5*7.55*50.81) = $92.91. Based on the stock's price at $67.12, this implies a potential upside of 38.42% from current levels.

** 4. 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 4.12%, payout ratio at 33.97%. Diluted TTM earnings per share at 5.62, and a MRQ book value per share value at 41.01, implies a Graham Number fair value = sqrt(22.5*5.62*41.01) = $72.01. Based on the stock's price at $58.9, this implies a potential upside of 22.26% from current levels.

** 5. Ennis Inc. (NYSE:EBF):** Engages in the production and sale of business forms, other business products, and apparel. Dividend yield at 4.04%, payout ratio at 42.57%. Diluted TTM earnings per share at 1.46, and a MRQ book value per share value at 13.98, implies a Graham Number fair value = sqrt(22.5*1.46*13.98) = $21.43. Based on the stock's price at $15.85, this implies a potential upside of 35.2% from current levels.

** 6. Gannett Co., Inc. (NYSE:GCI):** Operates as a media and marketing solutions company in the United States and internationally. Dividend yield at 5.55%, payout ratio at 12.47%. Diluted TTM earnings per share at 1.89, and a MRQ book value per share value at 9.82, implies a Graham Number fair value = sqrt(22.5*1.89*9.82) = $20.44. Based on the stock's price at $15.05, this implies a potential upside of 35.78% from current levels.

** 7. Community Trust Bancorp Inc. (NASDAQ:CTBI):** Operates as the holding company for Community Trust Bank, Inc. Dividend yield at 4.18%, payout ratio at 48.82%. Diluted TTM earnings per share at 2.53, and a MRQ book value per share value at 23.93, implies a Graham Number fair value = sqrt(22.5*2.53*23.93) = $36.91. Based on the stock's price at $29.94, this implies a potential upside of 23.27% from current levels.

** 8. SeaCube Container Leasing Ltd. (NYSE:BOX-OLD):** Operates as a container leasing company worldwide. Dividend yield at 6.56%, 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 $16.48, this implies a potential upside of 26.6% from current levels.

** 9. 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 4.15%, payout ratio at 33.92%. Diluted TTM earnings per share at 1.4, and a MRQ book value per share value at 10.78, implies a Graham Number fair value = sqrt(22.5*1.4*10.78) = $18.43. Based on the stock's price at $13.64, this implies a potential upside of 35.1% 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.