I am writing today about deeply undervalued dividend stocks that have dividend yields over 5%. And not only are those yields juicy, but they’re also above the stocks’ historical yield average.

As a result, we can assess their potential value by dividing their present dividend rate by the average historical yield. That gives us a potential price target, assuming the stock rises to the price where it has a lower yield.

For example, the average upside for each of these stocks is over 28%.

This is a result of comparing their long-term four-year average yields to their present yield

Moreover, as the chart on the right shows, the dividend yield average is 7.6%.

On top of that, the average price-to-earnings multiple is only 6.9x. That shows that this list of undervalued dividend stocks is truly worth buying.

Let’s dive in and look at the picks.

Verizon Communications (VZ)

Yield: 5.7%

Verizon Communications (NYSE:VZ) is in the process of ramping up its 5G investments, which uses a lot of its operating cash flow. But its earnings and cash flow are still growing and leave enough room to pay its huge dividend. Right now 22 analysts forecast on average that Verizon earnings will rise 2.2% to $5.53 per share next year, up from $5.41 this year.

This puts VZ stock on a forward P/E multiple of just 8.3x this year, and 8.1x next year. Moreover, its $2.56 annual dividend is still less than half of the company’s earnings (47%). As a result, VZ stock has a dividend yield of 5.7%.

This yield is much higher than its average over the past four years, or 4.42%. In fact, if the price had the same 4.42% yield now, this implies the stock would be higher.

For example, dividing the $2.56 dividend per share by 4.42% results in a price target of $57.92. That is over 29% over Monday’s close. This makes it one of the top undervalued dividend stocks.

MDC Holdings (MDC)

Yield: 5.5%

MDC Holdings (NYSE:MDC) is a major homebuilder that uses the Richmond American Homes name. It operates in 16 states from Arizona to Oregon and Washington and eight other Western and Midwestern states, as well as Maryland, Pennsylvania, Virginia, Tennessee and Florida.

MDC stock is now down over 34% YTD as of July 26. Nevertheless, analysts still forecast positive profits both this year and next.

For example, six analysts forecast earnings of $10.21 per share this year and $10 next year. That puts the stock on a forward P/E multiple of 3.6x times this year.

Moreover, MDC can easily afford to pay its annual dividend of $2 per share The forecast of $10.21 for this year more than covers this by 4x. In fact, MDC stock now has a 5.5% dividend yield.

That yield is significantly higher than its historical average of 3.56% over the past four years. Using that yield, the average price target is $56.18. That is more than 54% over Monday’s close of $36.43. This makes MDC Holdings one of the most attractive and undervalued dividend stocks.

Oaktree Specialty Lending Corp (OCSL)

Yield: 9.8%

Oaktree Specialty Lending Corp (NASDAQ:OCSL) is a business development company (or BDC) that lends out money to middle-market companies. It focuses on transactional lending, such as bridge financing, and mezzanine debt, senior and junior secured debt.

In addition, it helps companies fund expansions, acquisitions or management-led buyouts. Many of its lending clients come from the private equity side of its parent company’s business.

As a result, the company has solid earnings and pays a generous dividend of 66 cents annually. This gives Oaktree Specialty Lending Corp an attractive dividend yield of 9.8%.

This is well covered by the forecast 2022 earnings of 71 cents per share for this year. Moreover, the stock trades on a reasonable price-to-earnings (P/E) multiple of just 9.4x.

Moreover, over the past four years, its average yield has been 7.7%, well below today’s 9.8% rate. That means that OCSL stock is too cheap. If it were to have a yield of 7.7% with the same 66-cent dividend, its price would be 27% higher at $8.57 per share.

LyondellBasell Industries (LYB)

Yield: 5.4%

LyondellBasell Industries NV (NYSE:LYB) is a global chemicals and plastics manufacturer based in Houston, TX. As it is in a cyclical industry and the markets fear we are in a recession, the stock is now very cheap.

Interestingly, though, the stock is down less just 5% YTD. But from a valuation standpoint, that is actually a good thing. This is because at $87.53 on July 25 it trades for only 5.3x analysts’ forecasts of $16.53 per share in earnings for this year.

Moreover, analysts expect only slightly lower earnings next year. This puts its P/E at just 5.5x 2023 earnings. Meanwhile, its dividend at just $4.76 per share is just 29% of earnings. This implies that earnings could halve and it would still cover the dividend by almost 2x.

That dividend gives LYB stock an attractive 5.4% dividend yield. This is well above its four-year historical average of 5.1%. That implies the stock could still rise 6% to $93.33.

The Necessity Retail REIT (RTL)

Yield: 11.1%

The Necessity Retail REIT (NASDAQ:RTL) is a REIT that is focused on service-oriented and traditional retail and distribution-related commercial real estate.

RTL stock has an attractive 11.1% dividend yield. In the last four years, its average yield has been 8.94%, according to Seeking Alpha.

That average yield provides a tether to upside value. For example, if RTL stock had an 8.94% yield, the price would be $9.51 per share (i.e., $0.85 dividend/0.0894). That implies a potential upside of 23%.

Moreover, analysts forecast $1.02 per share in FFO this year and 7.8% higher FFO at $1.10 next year. That puts it on a forward P/FFO of just 7.5x for this year and 7x next year. That is very cheap.

Altogether, this makes RTL one of the top undervalued dividend stocks.

Brandywine Realty Trust (BDN)

Yield: 8.1%

Brandywine Realty Trust (NYSE:BDN) is a $1.62 billion market capitalization REIT operating in the Philadelphia, Austin and Washington, D.C. markets. It has a 25-year track record of buying and selling real estate properties and is very profitable.

Right now its 8.1% dividend yield is very attractive to dividend investors. This is high than its historical average of 5.83% for the last four years. With the same yield today, given its annual 76-cent dividend, the price would be over 38% higher ($13.06 per share).

In other words, if you divide the 76-cent dividend by the average yield of 5.83%, the result is $13.04. This is 38% over today’s price.

Moreover, analysts forecast its FFO will grow 1.4% from $1.38 per share this year to $1.41 next year. That puts it on a cheap P/FFO multiple of just 6.8x FFO cash flow this year and 6.7x for next year.

As a result, this is one of the top undervalued dividend stocks.

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.