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High Yield Dividend Stocks Setting New Yearly Highs

Tickers in this article: JNJ CAG MO CSCO TSM PG
NEW YORK ( TheStreet) -- Pushing aside the regressiveness of dividend double taxation, along with the upcoming increase in the tax, many investors will continue to allocate portfolio capital to yield-based stocks.

After all, high taxes or low taxes, as investors we still want to make money. Historically, dividend-paying stocks have performed well. There are some recent notable exceptions to the rule though. Hewlett-Packard (HPQ) comes to mind rather quickly.

HP isn't a rising stock paying a large dividend though, and that's what separates the zeroes from the heroes in my opinion.

When I examine stocks that pay large dividends, I want to avoid the "yield-traps" and stick with companies that are solid fundamentally.

Take a look at these winners in both share price and dividend yield.

CAG Dividend Yield ChartCAG Dividend Yield data by YCharts

Conagra Fooods (CAG)

Background: ConAgra Foods has transformed itself into an industry-leading, branded and value-added food company.

52-Week Range: $23.64 to $28.80*

Book Value: $11.22

Price To Book: 2.5

Earnings Payout Percentage: 63%

ConAgra currently has an annualized dividend of $1 with a yield of about 3.5%.

After announcing a large special dividend and buyout, shares jumped higher. ConAgra is a great stock, but don't chase this one higher. Wait for profit-taking and a lower price (less than $29) before entering.

Eight of 15 analysts now rate the company a hold while seven recommend buying and no analysts recommend selling. For a company analysts are mostly rating a hold, the stock really appreciated, gaining more than 20% in the last year, and consensus analyst target price is $30.17.

Watch for rising price targets if shares maintain the $30 price range after the ex-dividend date.

The last reported short interest is paltry and only 1.6% of the average trading float. The relative payout percentage of earnings towards dividends is small enough to consider the dividend safe.

CAG Payout Ratio TTM ChartCAG Payout Ratio TTM data by YCharts
PG Dividend Yield ChartPG Dividend Yield data by YCharts

Procter & Gamble (PG)

Background: Procter & Gamble manufactures and markets a broad range of consumer products world wide.

52-Week Range: $59.07 to $70.83

Book Value: $23.09

Price To Book: 3

Earnings Payout Percentage: 58%

P&G currently has an annualized dividend of $2.25, yielding 3.2%. I have recommended P&G before, and can you blame me? The price-to-earnings multiple is under 20 for both the trailing 12 months and the forward estimates. P&G closed at $66.68 and paid out 56.2 cents in dividends since the closing price of the last article. I don't think this company is finished rewarding investors yet.

The shares are modestly higher from a month ago, but are only about a dollar from the 52 week high. The stock appreciated 14% in the last year, and the average analyst target price is $74.85.

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