Here are the last eight highest-yielders (between 22-30) of the Dow, and my opinion about them. The O-Metrix Grading System is applied where possible, as well.

*(Data from finviz/morningstar and is current as of October 4 close. You can download O-Metrix calculator, **here**)*

**Caterpillar (NYSE:CAT):** Caterpillar played a main role in Dow’s Q3 performance. Caterpillar shows a trailing P/E ratio of 12.5, and a forward P/E ratio of 8.4, as of October 4. Analysts expect the company to have a 10.3% annual EPS growth in the next five years. With a profit margin of 7.8%, it offers a 2.54% dividend.

Caterpillar had a 39.22% EPS growth this quarter, and 190.36% this year. Target price implies a 57.2% upside potential, whereas it returned -9.0% in a year. Yields are impressive, and debts are decreasing since 2008. ROE is 35.44%, and sales rose by 36.71% this quarter. PEG value is 0.8. Moreover, it has a four-star rating from Morningstar. Although Caterpillar is having some problems currently, I believe it will outperform in the future.

**Hewlett-Packard (NYSE:HPQ):** Hewlett-Packard announced its HP t200 Zero Client for Multi Seat today. The company, as of the October 4 close, has a significant P/E ratio of 5.6, and a forward P/E ratio of 5.0. Estimated annual EPS growth for the next five years is 9.5%. Profit margin (7.3%) is lower than the industry average of 12.9%, while it pays a 2.09% dividend.

Earnings increased by 24.09% this quarter, and 17.51% this year. Target price indicates an about 47.7% increase potential, whereas it is trading 53.06% lower than its 52-week high. O-Metrix score is 10.93, and it returned -43.1% in a year. Debts are far from being a threat. Debt-to equity ratio is 0.5, which crushes the industry average of 8.0. P/E ratio, P/B (1.2), P/S (0.4), and debt-to equity ratio are strong green flags. ROE is 23.04%. PEG value is 0.5, and it has a five-star rating from Morningstar. Hewlett-Packard has almost 240% margin of safety, and it is one of the cheapest stocks with outstanding upside potential.

**IBM****:** IBM has agreed to acquire Q1 Labs for undisclosed financial terms. It has a P/E ratio of 14.6, and a forward P/E ratio of 12.2, as of the October 4 close. Analysts estimate a 9.0% annualized EPS growth for the next five years. It offers a 1.72% dividend, while the profit margin (14.7%) is above the industry average of 12.9%.

IBM is trading 5.86% lower than its 52-week high, while it has an O-Metrix score of 4.00. Target price implies a 9.4% upside movement potential, and it returned 26.9% in a year. ROA, ROE, and ROI are 14.17%, 69.58% and 30.56%, respectively. While SMA200 is 5.79%, SMA50 is 1.87%. Debts are far from being a threat. IBM had a 14.91% EPS growth this quarter, and 15.21% this year. My fair value estimate for IBM is $198.02 per share, which means that the stock is darn cheap. Beta value is 0.71. Returning large profits is no sweat for IBM in the long-term. Read a full investigation of IBM here.

**Cisco Systems (NASDAQ:CSCO):** Cisco is planning to make a new app for iPhone and iPad, which will bring the Show and Share software to the Apple world. The California-based Cisco has a P/E ratio of 13.6, and a forward P/E ratio of 8.4, as of the October 4 close. Five-year annual EPS growth forecast is 9.6%. With a profit margin of 15.0%, it pays a 1.54% dividend.

O-Metrix score is 5.06, whereas the stock is trading 35.30% lower than its 52-week high. Target price indicates an about 30.6% increase potential, and it returned -28.2% in the last twelve months. Debts are far from being a threat, and cash flow is doing OK. Operating margin (17.8%), profit margin, and debt-to equity ratio (0.3) are strong green flags. Gross margin is 61.4%. PEG value is 0.9, and it has a five-star rating from Morningstar. My fair value estimate for Cisco is $23.02 per share, which means the stock is undervalued by more than 30%. Read a full analysis of Cisco here.

**American Express (NYSE:AXP):** American Express has been downgraded by Jefferies to “Hold” from “Buy”. The financial shows a trailing P/E ratio of 12.1, and a forward P/E ratio of 11.0, as of October 4. Estimated annual EPS growth is 11.0% for the next five years. Profit margin (16.0%) is slightly above the industry average of 15.1%, while it offers a 1.66% dividend.

Target price is $57.26, which implies a 32.5% upside potential. The stock is currently trading 19.68% lower than its 52-week high, whereas it returned 12.6% in a year. Institutions hold 83.03% of the shares. Earnings increased by 27.49% this quarter, and 117.0% this year. Debt-to equity ratio is 3.4, way better than the industry average of 8.8. ROE is 28.50%. It has a four-star rating from Morningstar, and PEG value is 1.0. The debt-to assets ratio is decreasing since Q2 2010. American Express has an O-Metrix score of 5.48. Consider adding this stock to your portfolio.

**Walt Disney (NYSE:DIS):** Disney has just been upgraded from “Hold” to “Buy” by Citigroup (NYSE:C). The company was trading at a P/E ratio of 13.0, and a forward P/E ratio of 10.5, as of October 4. Analysts expect the company to have a 13.1% annual EPS growth in the next five years. Dividend yield is 1.34%, while the profit margin (11.3%) is slightly better than the industry average of 10.8%.

O-Metrix score of Disney is 6.14, whereas it is trading 30.24% lower than its 52-week high. The stock returned -8.7% in the last twelve months, and its target price indicates a 37.4% increase potential. Earnings increased by 15.35% this year, and 14.72% this quarter. Institutions hold 67.92% of the stock. The debt-to assets ratio is going south since 2007, and cash flow is doing great. Debt-to equity ratio is 0.2, way below the industry average of 1.5. Morningstar gives a five-star rating to Walt Disney, and its PEG value is 0.8. My fair value estimate for Walt Disney is between $42.97 and $64.36 per share, which means the stock has a long way up.

**Alcoa (NYSE:AA):** Alcoa will hold a web conference on October 11, regarding its Q3 2011 results. The New York-based Alcoa has a P/E ratio of 11.6, and a forward P/E ratio of 7.0, as of the October 4 close. Finviz analysts estimate a 70.8% annualized EPS growth for the next five years, while those of Morningstar estimate 3.0%. It pays a 1.32% dividend, while the profit margin is 4.0%.

The stock is currently trading 48.91% lower than its 52-week high, whereas its target price implies a 87.1% increase potential. O-Metrix score is 6.08, according to the market derived estimation of Alcoa’s 5-year annualized EPS growth (10.0%). The debt-to assets ratio is going south since 2008. 9 out of 18 analysts recommend buying, and it has a five-star rating from Morningstar. Alcoa is healing itself, so it might be advantageous to buy some.

**Bank of America (NYSE:BAC):** Bank of America has announced that by the end of the year, its correspondent lending business will be closed. The bank shows a trailing P/E ratio of -4.2, and a forward P/E ratio of 5.2, as of October 4. Estimated annualized EPS growth for the next five years is 9.1%. It pays a thin dividend of 0.69%, while the profit margin (-18.6%) is truly terrible.

Target price is $10.98, indicating an about 91.6% upside movement potential. The stock is trading 62.46% lower than its 52-week high, whereas it returned 42.1% in a year. Bank of America has cut its dividend from 32¢ to 1¢ in March 2009. Earnings decreased by 430.83% this quarter, and 28.55% this year. SMA20, SMA50, and SMA200 are -13.78%, -22.88% and -49.71%, respectively. Insiders hold only 0.02% of the shares. While ROA is -0.72%, ROE is -7.89%. ROI is -2.27%.

On the other hand, Buffett’s massive investment in the bank makes the stock more reliable. Its PEG value is 0.6. Debts are decreasing for the last two years, while assets are increasing. Moreover, it has a four-star rating from Morningstar. Bank of America still is a risky buy, but it is more trustworthy.

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