3 Buy-Rated Dividend Stocks Taking The Lead: LAMR, ED, GSK
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to perform against a general benchmark of the equities market and interest rates.
While plenty of high-yield opportunities exist, investors must always consider the safety of their dividend and the total return potential of their investment. It is not uncommon for a struggling company to suspend high-yielding dividends which could subsequently result in precipitous share price declines.
TheStreet Ratings' stock rating model views dividends favorably, but not so much that other factors are disregarded. Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown as compared to potential profit volatility, i.e. how much one is willing to risk in order to earn profits?; the level of acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings growth; and the financial strength of the underlying company as compared to its stock's valuation as compared to its stock's performance.
These and many more derived observations are then combined, ranked, weighted, and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of selecting stocks. As always, stock ratings should not be treated as gospel — rather, use them as a starting point for your own research.
The following pages contain our analysis of 3 stocks with substantial yields, that ultimately, we have rated "Buy."
Dividend Yield: 4.60%
(NASDAQ:
) shares currently have a dividend yield of 4.60%.
Lamar Advertising Company is a publicly owned equity real estate investment trust. The firm primarily engages in selling advertising space on billboards, buses, shelters, benches, and logo plates. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana. The company has a P/E ratio of 22.00.
The average volume for Lamar Advertising has been 903,600 shares per day over the past 30 days. Lamar Advertising has a market cap of $4.7 billion and is part of the real estate industry. Shares are up 8.3% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Lamar Advertising
as a
. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, notable return on equity, increase in stock price during the past year and good cash flow from operations. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 1940.9% when compared to the same quarter one year prior, rising from $10.19 million to $207.88 million.
- Despite its growing revenue, the company underperformed as compared with the industry average of 10.1%. Since the same quarter one year prior, revenues slightly increased by 5.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, LAMAR ADVERTISING CO's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- Net operating cash flow has increased to $149.33 million or 49.29% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 11.97%.
- You can view the full Lamar Advertising Ratings Report.
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Dividend Yield: 4.30%
(NYSE:
) shares currently have a dividend yield of 4.30%.
Consolidated Edison, Inc., through its subsidiaries, engages in regulated electric, gas, and steam delivery businesses in the United States. The company has a P/E ratio of 16.33.
The average volume for Consolidated Edison has been 2,459,700 shares per day over the past 30 days. Consolidated Edison has a market cap of $17.7 billion and is part of the utilities industry. Shares are down 10.9% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
Consolidated Edison
as a
. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- CONSOLIDATED EDISON 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. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CONSOLIDATED EDISON INC increased its bottom line by earning $3.71 versus $3.61 in the prior year. This year, the market expects an improvement in earnings ($3.91 versus $3.71).
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.8%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Multi-Utilities industry and the overall market, CONSOLIDATED EDISON INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Consolidated Edison Ratings Report.
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Dividend Yield: 5.90%
(NYSE:
) shares currently have a dividend yield of 5.90%.
GlaxoSmithKline plc creates, discovers, develops, manufactures, and markets pharmaceutical products, including vaccines, over-the-counter medicines, and health-related consumer products worldwide. The company has a P/E ratio of 16.27.
The average volume for GlaxoSmithKline has been 3,838,200 shares per day over the past 30 days. GlaxoSmithKline has a market cap of $126.8 billion and is part of the drugs industry. Shares are up 9.2% year-to-date as of the close of trading on Thursday.
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TheStreet Ratings rates
GlaxoSmithKline
as a
. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- The gross profit margin for GLAXOSMITHKLINE PLC is currently very high, coming in at 71.15%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.06% is above that of the industry average.
- GLAXOSMITHKLINE PLC 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. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, GLAXOSMITHKLINE PLC reported lower earnings of $1.77 versus $3.68 in the prior year. This year, the market expects an improvement in earnings ($92.88 versus $1.77).
- GSK, with its decline in revenue, underperformed when compared the industry average of 8.2%. Since the same quarter one year prior, revenues fell by 35.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Pharmaceuticals industry and the overall market, GLAXOSMITHKLINE PLC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The share price of GLAXOSMITHKLINE PLC has not done very well: it is down 11.89% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. 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 GlaxoSmithKline Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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