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Do you prefer stocks that offer both income and growth? For a closer look at potentially undervalued dividend stocks, we ran a screen.

We began with stocks considered "dividend champions" by DRiP Investing, stocks that have consistently increased their dividends over the last 25 years. We then screened these names for those that currently pay dividend yields above 2% and sustainable payout ratios below 50%.

Finally we screened for those that also appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the "godfather of value investing" Benjamin Graham.

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 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 should be trading higher? Use this list as a starting point for your own analysis.

List sorted by potential upside implied by the Graham Number.

1. AFLAC Inc. (AFL): Provides supplemental health and life insurance. Market cap at $19.91B, most recent closing price at $43.29. Dividend yield at 3.10%, payout ratio at 24.97%. Diluted TTM earnings per share at 5.03, and a MRQ book value per share value at 29.18, implies a Graham Number fair value = sqrt(22.5*5.03*29.18) = $57.47. Based on the stock's price at $42.84, this implies a potential upside of 34.14% from current levels.

2. American States Water Company (AWR): Provides water, electric, and contracted services in the United States. Market cap at $697.07M, most recent closing price at $37.01. Dividend yield at 3.03%, payout ratio at 46.95%. Diluted TTM earnings per share at 2.55, and a MRQ book value per share value at 40.11, implies a Graham Number fair value = sqrt(22.5*2.55*40.11) = $47.97. Based on the stock's price at $37.15, this implies a potential upside of 29.13% from current levels.

3. Tompkins Financial Corporation. (TMP): Through its banking subsidiaries, Tompkins Trust Company, The Bank of Castile, and The Mahopac National Bank, provides banking and financial services to individuals, corporations, and other business clients in New York. Market cap at $443.59M, most recent closing price at $36.47. Dividend yield at 3.97%, payout ratio at 45.86%. Diluted TTM earnings per share at 3.1, and a MRQ book value per share value at 27.33, implies a Graham Number fair value = sqrt(22.5*3.1*27.33) = $43.66. Based on the stock's price at $36.37, this implies a potential upside of 20.05% from current levels.

4. Community Trust Bancorp Inc. (CTBI): Operates as the holding company for Community Trust Bank, Inc. Market cap at $505.98M, most recent closing price at $32.81. Dividend yield at 3.81%, payout ratio at 46.08%. Diluted TTM earnings per share at 2.69, and a MRQ book value per share value at 24.34, implies a Graham Number fair value = sqrt(22.5*2.69*24.34) = $38.38. Based on the stock's price at $32.38, this implies a potential upside of 18.54% from current levels.

5. The Chubb Corporation (CB): Provides property and casualty insurance to businesses and individuals. Market cap at $19.74B, most recent closing price at $73.64. Dividend yield at 2.24%, payout ratio at 26.08%. Diluted TTM earnings per share at 5.86, and a MRQ book value per share value at 57.38, implies a Graham Number fair value = sqrt(22.5*5.86*57.38) = $86.98. Based on the stock's price at $73.54, this implies a potential upside of 18.28% from current levels.

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

Source: 5 Dividend Champions Undervalued By The Graham Number