If you’re an income investor that’s ever wanted to lock in a high yield, then know this: sometimes you’ve got to reach for it. 

Not every high yielder is going to be a world-dominating company with a pristine balance sheet. 

#-ad_banner-#In fact, few of them are.

That said, a great place to look for reliable high yields is among stocks that are currently out of favor. The market often discards stocks and prices them accordingly when industries mature and cease growing. Yet, in most of these cases, the mature industry is worth billions of dollars and in no danger of disappearing anytime soon. 

These companies usually generate steady profits and can easily afford generous dividend payments, offering a compelling opportunity for income investors. 

I created a list of out-of-favor stocks by screening for big price declines and then selecting profitable companies that have large amounts of cash, generating free cash flow that exceeds the dividend. 

Here are the three best stocks that met my criteria. They may be unloved by Wall Street, but should find plenty of admirers among income investors. 

1. RR Donnelley (Nasdaq: RRD)
Yield: 10%

RR Donnelley is North America’s largest commercial printer, with sales approaching $11 billion a year. Commercial printers are out of favor with investors because of the rise of desktop publishing and e-books. 

Donnelly is countering weakening demand for printed materials with various digital initiatives. The company recently acquired EDGAR Online, a provider of financial data and analytics to professional investors. In addition, Donnelley is entering new higher-growth areas such as digital-book distribution for e-readers. 

Donnelley’s earnings per share (EPS) improved 33% to $0.44 in the first quarter of 2012 from $0.33 a year earlier. The company’s mid-point for full-year 2012 earnings guidance is $1.88, up 3% from $1.82 one year ago. Recent customers include AT&T (NYSE: T), Verizon (NYSE: VZ) and Office Depot (Nasdaq: OBP). Though they bode well for future earnings, Donnelley shares have fallen nearly 44% in the past 12 months.  

Donnelley has paid a cash dividend since 1985 and yields about 9.5% based on its $1.04 annual dividend. Dividend payout is roughly 50% and strong free cash flow easily covers annual dividend costs of $190 million. 

2. Pitney Bowes (NYSE: PBI)
Yield: 10%

Pitney Bowes is the world leader in mail processing equipment. The company generates $5.3 billion of annual sales and operates in more than 100 countries. 

Mail processing equipment is out of favor because of competition from Internet advertising. To drive sales, Pitney is developing new digital products such as Volly, a secure digital mail platform for processing bills, statements and account communications. In addition, Pitney just signed a multi-year agreement with Facebook (Nasdaq: FB) to supply location processing data and applications for Facebook’s on-line tools. 

Pitney’s first-quarter earnings from continuing operations rose 60% to $0.69 per share compared with the first quarter of 2011. Management anticipates full-year 2012 earnings of between $2.05 and $2.25 per share, or at least 18% higher than last year. Pitney also estimates free cash flow will exceed $700 million this year, which is more than twice annual dividend costs of $300 million. 

The company has a 30-year record of dividend growth, and currently pays $1.50 per share annually. Dividend payout is very manageable at 55%, and balance sheet cash of $916 million provides triple coverage of the dividend. The stock’s yield has averaged 5.5% in the past five years, but recently soared to nearly 10% after an 18% share price decline.  

3. STMicroelectronics (NYSE: STM)
Yield: 6%

STM is the largest European manufacturer of semiconductors, with annual sales of nearly $10 billion. A weak semiconductor industry, lower earnings and a general meltdown of European stocks are all factors that have contributed to a 45% share price decline in the past 12 months. 

Although analysts expect earnings to drop 60% to $0.16 per share this year, STM’s future earnings should improve because of its strategic partnership with ST-Ericsson. The partnership recently unveiled its next generation NovaThor smartphone platform, which will begin shipping this year. Samsung uses the NovaThor system in new Android-powered phones. Analysts say STM can deliver 30% earnings growth for the next five years. 

STM produced free cash flow of $98 million last quarter, which was more than enough to cover $88 million of dividend payments. The cash balance is at $2.2 billion, or $2.50 a share, which is nearly half of STM’s $5.38 share price. STM plans to pay a $0.40 dividend in 2012, which is a 7.5% forward yield.

Risks to Consider: Donnelly and Pitney Bowes can only prosper if the printing/ mailing industry remains viable for the foreseeable future. In addition, both of these companies have made investments that ratchet up credit risk. Moody’s recently cut Donnelly’s credit rating from “Ba1” to “Ba2.” S&P rates Pitney Bowes’ corporate debt at “BBB+.” I am keeping a close watch on both companies for signs of eroding credit quality. 

Action to Take –> My top pick overall is STM since I think this company is likely to rebound sooner rather than later because of its relationship with Samsung, which recently replaced Apple (Nasdaq: AAPL) as the top smartphone manufacturer, with 44.5 million units shipped in the first quarter of the year. I also like Donnelly and Pitney Bowes for their generous yields supported by strong cash flow.