Best Of The Buy-Rated Dividend Stocks: Top 3 Companies: EPD, DUK, SO
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: 4.50%
(NYSE:
) shares currently have a dividend yield of 4.50%.
Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, petrochemicals, and refined products in the United States and internationally. The company has a P/E ratio of 22.43.
The average volume for Enterprise Products Partners has been 3,525,000 shares per day over the past 30 days. Enterprise Products Partners has a market cap of $63.9 billion and is part of the energy industry. Shares are down 9.9% year-to-date as of the close of trading on Wednesday.
TheStreet Ratings rates
Enterprise Products Partners
as a
. The company's strongest point has been its strong cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- EPD, with its decline in revenue, slightly underperformed the industry average of 18.7%. Since the same quarter one year prior, revenues fell by 22.2%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 5.6% when compared to the same quarter one year ago, dropping from $698.90 million to $659.80 million.
- ENTERPRISE PRODS PRTNRS -LP's earnings per share declined by 9.3% 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, ENTERPRISE PRODS PRTNRS -LP increased its bottom line by earning $1.48 versus $1.41 in the prior year. For the next year, the market is expecting a contraction of 3.0% in earnings ($1.43 versus $1.48).
- Net operating cash flow has declined marginally to $1,457.80 million or 2.76% when compared to the same quarter last year. Despite a decrease in cash flow of 2.76%, ENTERPRISE PRODS PRTNRS -LP is in line with the industry average cash flow growth rate of -12.58%.
- The gross profit margin for ENTERPRISE PRODS PRTNRS -LP is currently extremely low, coming in at 8.87%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 6.47% is above that of the industry average.
- You can view the full Enterprise Products Partners Ratings Report.
Dividend Yield: 4.10%
(NYSE:
) shares currently have a dividend yield of 4.10%.
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 22.40.
The average volume for Duke Energy Corporation has been 3,492,000 shares per day over the past 30 days. Duke Energy Corporation has a market cap of $54.8 billion and is part of the utilities industry. Shares are down 7.7% year-to-date as of the close of trading on Wednesday.
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 -15.53%.
- 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 ($4.66 versus $3.47).
- DUK, with its decline in revenue, underperformed when compared the industry average of 9.4%. Since the same quarter one year prior, revenues slightly dropped by 9.1%. 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electric Utilities industry. The net income has significantly decreased by 85.9% when compared to the same quarter one year ago, falling from $688.00 million to $97.00 million.
- You can view the full Duke Energy Corporation Ratings Report.
Dividend Yield: 4.70%
(NYSE:
) 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 20.71.
The average volume for Southern has been 5,747,400 shares per day over the past 30 days. Southern has a market cap of $41.1 billion and is part of the utilities industry. Shares are down 8.7% year-to-date as of the close of trading on Wednesday.
TheStreet Ratings rates
Southern
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth 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:
- Despite its growing revenue, the company underperformed as compared with the industry average of 9.4%. Since the same quarter one year prior, revenues slightly increased by 3.1%. 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.
- SOUTHERN CO's earnings per share declined by 29.8% 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, SOUTHERN CO increased its bottom line by earning $2.20 versus $1.87 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.20).
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Electric Utilities industry. The net income has significantly decreased by 26.4% when compared to the same quarter one year ago, falling from $431.00 million to $317.00 million.
- The gross profit margin for SOUTHERN CO is currently lower than what is desirable, coming in at 26.82%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.82% trails that of the industry average.
- You can view the full Southern Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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