Best Of The Buy-Rated Dividend Stocks: Top 3 Companies: DUK, HCN, CNP
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: 4.20%
(NYSE:
) shares currently have a dividend yield of 4.20%.
Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States and Latin America. It operates through three segments: Regulated Utilities, International Energy, and Commercial Power. The company has a P/E ratio of 21.98.
The average volume for Duke Energy Corporation has been 3,639,000 shares per day over the past 30 days. Duke Energy Corporation has a market cap of $53.8 billion and is part of the utilities industry. Shares are down 10.3% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Duke Energy Corporation
as a
. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- Net operating cash flow has slightly increased to $1,419.00 million or 1.93% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -14.59%.
- DUKE ENERGY CORP 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, DUKE ENERGY CORP reported lower earnings of $3.47 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($4.65 versus $3.47).
- DUK, with its decline in revenue, underperformed when compared the industry average of 10.6%. Since the same quarter one year prior, revenues slightly dropped by 1.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
- Even though the current debt-to-equity ratio is 1.04, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.35 is very low and demonstrates very weak liquidity.
- You can view the full Duke Energy Corporation Ratings Report.
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Dividend Yield: 4.20%
(NYSE:
) shares currently have a dividend yield of 4.20%.
Health Care REIT, 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. The company has a P/E ratio of 55.31.
The average volume for Health Care REIT has been 2,784,100 shares per day over the past 30 days. Health Care REIT has a market cap of $26.1 billion and is part of the real estate industry. Shares are up 3% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Health Care REIT
as a
. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, solid stock price performance and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- HEALTH CARE REIT INC reported significant earnings per share improvement 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, HEALTH CARE REIT 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 ($1.75 versus $1.40).
- 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 632.0% when compared to the same quarter one year prior, rising from $28.00 million to $204.99 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 9.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 714.28% and other important driving factors, this stock has surged by 34.27% over the past year, outperforming the rise in the S&P 500 Index during the same period. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
- 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. Compared to other companies in the Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, HEALTH CARE REIT INC underperformed against that of the industry average and is significantly less than that of the S&P 500.
- You can view the full Health Care REIT Ratings Report.
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Dividend Yield: 4.80%
(NYSE:
) shares currently have a dividend yield of 4.80%.
CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company has a P/E ratio of 14.64.
The average volume for CenterPoint Energy has been 4,001,500 shares per day over the past 30 days. CenterPoint Energy has a market cap of $8.9 billion and is part of the utilities industry. Shares are down 12.2% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
CenterPoint Energy
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, reasonable valuation levels, notable return on equity and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 2.8%. Since the same quarter one year prior, revenues slightly increased by 8.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multi-Utilities industry. The net income increased by 55.8% when compared to the same quarter one year prior, rising from $113.00 million to $176.00 million.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, CENTERPOINT ENERGY INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- CENTERPOINT ENERGY INC reported significant earnings per share improvement 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CENTERPOINT ENERGY INC increased its bottom line by earning $1.42 versus $0.72 in the prior year. For the next year, the market is expecting a contraction of 25.4% in earnings ($1.06 versus $1.42).
- You can view the full CenterPoint Energy Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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