6 Best Dividend Stocks in the S&P 500 Index

Investors love dividend stocks. But which companies have the highest dividend yields and are buy-rated? Here are six stocks to consider for your portfolio, according to TheStreet Ratings.
By Laurie Kulikowski ,

Investors love dividend stocks. But which companies are both buy-rated and have the highest dividend yields? There are six stocks to consider for your portfolio, according to TheStreet Ratings.

Here are the six best-rated dividend stocks in the S&P 500 Index, with ratings from TheStreet Ratings for added perspective.

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014, beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Note: Stock ratings are as of Nov. 8, 2015.

SO

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6. Southern Co. (SO) - Get Report
Industry: Utilities Non-Telecom/Electric Utilities
Annual Dividend Yield: 4.75%
Year-to-date return: -11.2%

The Southern Company, together with its subsidiaries, operates as a public electric utility company.

TheStreet Said: TheStreet Ratings team rates SOUTHERN CO as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

We rate SOUTHERN CO (SO) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SO's revenue growth has slightly outpaced the industry average of 0.1%. Since the same quarter one year prior, revenues slightly increased by 1.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 43.08% is the gross profit margin for SOUTHERN CO which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 17.94% is above that of the industry average.
  • SOUTHERN CO has improved earnings per share by 31.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, SOUTHERN CO increased its bottom line by earning $2.18 versus $1.87 in the prior year. This year, the market expects an improvement in earnings ($2.87 versus $2.18).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 31.8% when compared to the same quarter one year prior, rising from $735.00 million to $969.00 million.
  • In its most recent trading session, SO has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
  • You can view the full analysis from the report here: SO

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5. Verizon Communications (VZ) - Get Report
Industry: Telecom/Integrated Telecommunication Services
Annual Dividend Yield: 4.89%
Year-to-date return: -2.1%

Verizon Communications Inc., through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide.

TheStreet Said: TheStreet Ratings team rates VERIZON COMMUNICATIONS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate VERIZON COMMUNICATIONS INC (VZ) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and expanding profit margins. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • VZ's revenue growth has slightly outpaced the industry average of 2.6%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Diversified Telecommunication Services industry average. The net income increased by 9.3% when compared to the same quarter one year prior, going from $3,695.00 million to $4,038.00 million.
  • Net operating cash flow has increased to $9,520.00 million or 13.97% when compared to the same quarter last year. In addition, VERIZON COMMUNICATIONS INC has also modestly surpassed the industry average cash flow growth rate of 7.84%.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 11.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, VERIZON COMMUNICATIONS INC reported lower earnings of $2.51 versus $4.00 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $2.51).
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 59.87%. Regardless of VZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, VZ's net profit margin of 12.17% compares favorably to the industry average.
  • You can view the full analysis from the report here: VZ

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4. HP Inc. (HPQ) - Get Report
Industry: Technology
Annual Dividend Yield: 5.01%
Return since splitting the company on Nov. 1: 12.3%

HP Inc., together with its subsidiaries, provides products, technologies, software, solutions, and services to individual consumers and small- and medium-sized businesses (SMBs), as well as to the government, health, and education sectors worldwide.

TheStreet Said: TheStreet Ratings team rates HP INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate HP INC (HPQ) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its attractive valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The debt-to-equity ratio is somewhat low, currently at 0.94, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that HPQ's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
  • The revenue fell significantly faster than the industry average of 25.6%. Since the same quarter one year prior, revenues slightly dropped by 8.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Computers & Peripherals industry and the overall market on the basis of return on equity, HP INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, HPQ has underperformed the S&P 500 Index, declining 12.52% from its price level of one year ago. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • You can view the full analysis from the report here: HPQ

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3. Welltower Inc. (HCN)
Industry: Financial Services
Annual Dividend Yield: 5.08%
Year-to-date return: -14.2%

Welltower Inc. is an independent equity real estate investment trust. The firm engages in acquiring, planning, developing, managing, repositioning and monetizing of real estate assets. It primarily invests in the real estate markets of the United States.

TheStreet Said: TheStreet Ratings team rates WELLTOWER INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate WELLTOWER INC (HCN) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • HCN's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues rose by 15.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • WELLTOWER INC has improved earnings per share by 18.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, WELLTOWER INC increased its bottom line by earning $1.40 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($2.44 versus $1.40).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 30.0% when compared to the same quarter one year prior, rising from $152.61 million to $198.40 million.
  • Net operating cash flow has significantly increased by 61.22% to $416.98 million when compared to the same quarter last year. In addition, WELLTOWER INC has also vastly surpassed the industry average cash flow growth rate of -24.80%.
  • You can view the full analysis from the report here: HCN

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2. AT&T Inc. (T) - Get Report
Industry: Telecom/Integrated Telecommunications Services
Annual Dividend Yield: 5.63%
Year-to-date return: -1.3%

AT&T Inc. provides telecommunications services in the United States and internationally. The company operates through two segments, Wireless and Wireline.

TheStreet Said: TheStreet Ratings team rates AT&T INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate AT&T INC (T) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 18.6%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has increased to $10,797.00 million or 23.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.84%.
  • The gross profit margin for AT&T INC is rather high; currently it is at 54.48%. Regardless of T's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 7.65% trails the industry average.
  • AT&T INC's earnings per share declined by 13.8% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, AT&T INC reported lower earnings of $1.19 versus $3.41 in the prior year. This year, the market expects an improvement in earnings ($2.70 versus $1.19).
  • The change in net income from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Diversified Telecommunication Services industry average. The net income has decreased by 0.3% when compared to the same quarter one year ago, dropping from $3,002.00 million to $2,994.00 million.
  • You can view the full analysis from the report here: T

WMB

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1. The Williams Companies Inc. (WMB) - Get Report
Industry: Energy/Oil & Gas Storage & Transportation
Annual Dividend Yield: 6.69%
Year-to-date return: -15.5%

The Williams Companies, Inc. operates as an energy infrastructure company primarily in the United States. The company operates in three segments: Williams Partners, Access Midstream, and Williams NGL & Petchem Services.

TheStreet Said: TheStreet Ratings team rates WILLIAMS COS INC as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate WILLIAMS COS INC (WMB) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has significantly increased by 74.78% to $603.00 million when compared to the same quarter last year. In addition, WILLIAMS COS INC has also vastly surpassed the industry average cash flow growth rate of -27.14%.
  • The gross profit margin for WILLIAMS COS INC is rather high; currently it is at 53.92%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -2.22% trails the industry average.
  • Despite the weak revenue results, WMB has outperformed against the industry average of 37.2%. Since the same quarter one year prior, revenues fell by 13.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • WILLIAMS COS INC has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, WILLIAMS COS INC increased its bottom line by earning $2.82 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 71.3% in earnings ($0.81 versus $2.82).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 102.4% when compared to the same quarter one year ago, falling from $1,678.00 million to -$40.00 million.
  • You can view the full analysis from the report here: WMB
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