Best 3 Yielding Buy-Rated Stocks: ETP, SO, NWBI

These 3 dividend stocks are rated a Buy by TheStreet
By TheStreet Wire ,

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."

Energy Transfer Partners

Dividend Yield: 9.50%

Energy Transfer Partners

(NYSE:

ETP

) shares currently have a dividend yield of 9.50%.

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company has a P/E ratio of 59.99.

The average volume for Energy Transfer Partners has been 3,488,200 shares per day over the past 30 days. Energy Transfer Partners has a market cap of $22.6 billion and is part of the energy industry. Shares are down 34.4% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Energy Transfer Partners

as a

buy

. The company's strengths can be seen in multiple areas, such as its compelling growth in net income and notable return on equity. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

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 Oil, Gas & Consumable Fuels industry. The net income increased by 36.3% when compared to the same quarter one year prior, rising from $460.00 million to $627.00 million.
  • Despite the weak revenue results, ETP has outperformed against the industry average of 33.1%. Since the same quarter one year prior, revenues fell by 18.1%. 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENERGY TRANSFER PARTNERS -LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
  • ENERGY TRANSFER PARTNERS -LP's earnings per share declined by 15.2% in the most recent quarter compared to 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, ENERGY TRANSFER PARTNERS -LP turned its bottom line around by earning $1.64 versus -$0.24 in the prior year. For the next year, the market is expecting a contraction of 36.9% in earnings ($1.04 versus $1.64).
  • The gross profit margin for ENERGY TRANSFER PARTNERS -LP is currently extremely low, coming in at 13.44%. Regardless of ETP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, ETP's net profit margin of 5.43% compares favorably to the industry average.

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Southern

Dividend Yield: 4.70%

Southern

(NYSE:

SO

) shares currently have a dividend yield of 4.70%.

The Southern Company, together with its subsidiaries, operates as a public electric utility company. The company has a P/E ratio of 20.72.

The average volume for Southern has been 5,205,100 shares per day over the past 30 days. Southern has a market cap of $41.6 billion and is part of the utilities industry. Shares are down 7.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Southern

as a

buy

. 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 ratings report include:

  • SO's revenue growth has slightly outpaced the industry average of 0.5%. 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 ($2.85 versus $2.18).
  • 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 Electric Utilities industry average. 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.

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Northwest

Dividend Yield: 4.20%

Northwest

(NASDAQ:

NWBI

) shares currently have a dividend yield of 4.20%.

Northwest Bancshares, Inc. operates as a bank holding company for Northwest Savings Bank that offers various personal and business banking solutions in the United States. The company operates through two segments, Community Banking and Consumer Finance. The company has a P/E ratio of 18.61.

The average volume for Northwest has been 702,500 shares per day over the past 30 days. Northwest has a market cap of $1.3 billion and is part of the banking industry. Shares are up 7.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Northwest

as a

buy

. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, expanding profit margins and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
  • The gross profit margin for NORTHWEST BANCSHARES INC is currently very high, coming in at 82.55%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, NWBI's net profit margin of 12.97% significantly trails the industry average.
  • 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.
  • NORTHWEST BANCSHARES INC's earnings per share declined by 31.6% 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, NORTHWEST BANCSHARES INC reported lower earnings of $0.68 versus $0.73 in the prior year. This year, the market expects an improvement in earnings ($0.71 versus $0.68).

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