• These dividend stocks are well situated to pay their high yields. The dividend payout ratios are less than 50% for these stocks. That makes their dividend yields much more secure, allowing the companies to pay them even when earnings turn down.
• Citigroup (C): This incredibly cheap stock trades for less than 6.5x earnings, 60% of its tangible book value, a 4.3% dividend yield, and its earnings more than cover dividend payments. Moreover, analysts are still forecasting higher earnings growth for next year, despite fears of a recession.
• Fidelity National Financial (FNF): This company should post higher earnings next year despite a downturn in real estate transactions. This puts it on a cheap 6.1x earnings multiple and an attractive dividend yield of 4.8%. Moreover, its dividend payout ratio is low at just 29.2% this year.
• Whirlpool (WHR): This hard consumer durables machine maker has an attractive 4.35% dividend yield and a low 28.9% payout ratio. The stock is also cheap at 6.6x this year’s forecast earnings and 6.3x next year.
• LyondellBasell Industries (LYB): Its earnings forecast for 2022 of $16.49 per share more than covers the dividend per share. The stock has a low 29% payout ratio, which makes its 5.4% dividend yield very sustainable. With its low 5.4x earnings multiple, the stock is very cheap.
• KeyCorp (KEY): KeyCorp is a cheap midwest regional bank holding company with a 4.4% dividend yield and a low 34.8% payout ratio. Given its low 7.9x multiple, the stock is worth investing in for the long term.
• Best Buy (BBY): Best Buy is cheap now at just 8x this year’s earnings forecast. Moreover, its dividend yield is high at 5.1% but seems sustainable since the payout ratio is just 40.8%. Moreover, the company has paid dividends in the past 18 years.

I am talking today about six dividend stocks that have enough earnings to pay their high yields. The dividend payout ratios, which are dividends divided by earnings per share (EPS), are less than 50%.

That makes their dividend yields much more secure, allowing the companies to easily cover the payments even when earnings turn down. That will ease the minds of investors concerned about a possible recession or worried that these dividend stocks won’t be able to keep paying dividends.

As a result, these stocks will not likely have as severe a downdraft as other stocks. And that alone makes them more valuable as well. So investors can be assured that these dividend stocks have long-term value for their investors.

Let’s dive in and look at these stocks.

Dividend Stocks: Citigroup (C)

Payout Ratio: 30%
Dividend Yield: 4.3%

Citigroup (NYSE:C) stock is very cheap with its $2.04 annual dividend and its price of $47.21 as of the close on June 28. Analysts estimate its earnings per share (EPS) will reach $6.81 this year according to the average of 19 analysts. That puts its dividend coverage ratio low at just 30%.

In other words, even if EPS fell by 50% to $3.40 per share, the $2.04 annual dividend could theoretically still be paid. That would especially be the case if any earnings dip is forecast as temporary.

Actually, so far, analysts are forecasting higher earnings at $7.29 for 2023. That puts the stock on a cheap forward P/E multiple of just 6.5x earnings.

Moreover, Citigroup stock trades for less than 60% of its tangible book value (TBV) per share of $79.74, according to Seeking Alpha. That means that even if 40% of the book value of its loans drop to nothing, the stock would still be below its TBV.

This shows how incredibly cheap C stock is now, especially given its high yield, low P/TBV per share, low P/E, and low dividend coverage ratio. It makes Citigroup one of the best dividend stocks to buy now.

Fidelity National Financial (FNF)

Payout Ratio: 29.2%
Dividend Yield: 4.8%

Fidelity National Financial (NYSE:FNF) is a cheap and profitable title, escrow and trust company. FNF stock is off over 29% YTD as of the close on June 28. At $36.83 with its $1.76 dividend per share (DPS), the stock has a dividend yield of 4.8%.

However, earnings-per-share (EPS) are forecast to rise 2.7% from $6.02 per share to $6.19 in 2023, according to Seeking Alpha. As a result, its dividend payout ratio is low at just 29.2% (i.e., $1.76 / $6.02).

This puts FNF stock on a very low price-to-earnings (P/E) multiple of just 6.1 times 2022 earnings.

Moreover, FNF’s average yield over the past four years has been 3.37%. This implies its target price is 39.3% higher at $52.38 per share (i.e., $1.76/0.0337). That is 42% over today’s price, showing that the stock is very undervalued.

Given these metrics, especially its low payout ratio, FNF should be able to keep paying its dividend, even if there is a large downturn in revenue.

Whirlpool (WHR)

Payout Ratio: 28.9%
Dividend Yield: 4.35%

Whirlpool Corp (NYSE:WHR) is a global consumer appliance maker. Earnings are forecast to reach $24.23 this year. That makes its $7 annual dividend payment just 28.9% of forecasts for EPS this year and even lower next year.

It also gives the stock a cheap 6.6x multiple and a 4.35% dividend yield. With earnings forecast to rise 6.1% next year, the multiple falls to 6.3x.

Whirlpool is one of the few companies that actually projects its own free cash flow for the year. On April 25, it made its own forecast for $1.25 billion in FCF in 2022. As the dividend costs just over $412 million, there is plenty of room for stock buybacks.

In fact, earlier this year the company added another $2 billion to its share repurchase program..

This means its dividend and buyback yields provide a total yield of 14.35%. Given its low payout ratio, that means WHR stock is one of the best dividend stocks on this list.

LyondellBasell Industries (LYB)

Payout Ratio: 29%
Dividend Yield: 5.4%

LyondellBasell Industries (NYSE:LYB) is a global chemical company that makes plastics and composites. It pays an annual $4.76 dividend annually which is well covered by its earnings. Its dividend yield works out to 5.4% based on its price as of June 28 of $88.42.

Analysts forecast earnings for 2022 of $16.49 per share. That means the $4.76 dividend has a low 29% dividend payout ratio. Its earnings appear to be fairly stable for now, despite fears of a recession. Earnings projected for 2023 are $16.15, down just 2.1%.

This is essentially a cyclical play. At just 5.4x earnings, with this high yield and low payout ratio, the stock pays an investor to wait until the economic cycle turns around.

KeyCorp (KEY)

Payout Ratio: 34.8%
Dividend Yield: 4.4%

KeyCorp (NYSE:KEY) is a Cleveland, OH-based consumer and commercial regional bank with good profits and a low payout ratio (34.8%) given its high dividend yield (4.4%).

Moreover, analysts project an 8.9% growth rate for earnings in 2023 to $2.44, up from $2.24 in 2022. That implies the stock is cheap at just 7.9x earnings this year and 7.2x forecast for next year.

The bank recently reported that its Q1 earnings included a low charge-off rate of just 13 basis points. In addition, the company has an ongoing share buyback program which will act to raise its dividend per share over time. This makes this bank stock one of the best dividend stocks going to consider investing in on this list.

Dividend Stocks: Best Buy (BBY)

Payout Ratio: 40.9%
Dividend Yield: 5.1%

Best Buy (NYSE:BBY) is now very cheap with its 5.1% dividend yield, now that the stock has fallen almost one-third year-to-date (YTD). Clearly, fears of a recession have impacted the price and investors are showing deep uncertainty about its future.

But, often that is the best time to step in and start to dollar-cost-average your investment plan for a stock like this. After all, its $3.52 dividend represents just 40.9% of its forecast $8.61 EPS for this year.

Moreover, Best Buy has paid a dividend in each of the past 18 years and raised it during the last eight years. That implies that the company is quite committed to its dividend policy.

And, so far, analysts are projecting higher earnings for next year at $9.82 per share, according to Seeking Alpha. That makes it very cheap at 8x this year and 7x next year’s earnings.

Investors will be scrutinizing its upcoming earnings very carefully, especially if the U.S. is in a mild recession. But at this point, investors should figure that now is a good time to take advantage of its cheap valuation.

On the date of publication, Mark Hake did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.