Don't Miss Out: Top 3 Yielding Buy-Rated Stocks: RRD, ETP, PBCT
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 or Stephanie Link.
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: 5.30%
(NASDAQ:
) shares currently have a dividend yield of 5.30%.
R.R. Donnelley & Sons Company provides integrated communication solutions to private and public sectors worldwide. It operates through Publishing and Retail Services, Variable Print, Strategic Services, and International segments. The company has a P/E ratio of 33.29.
The average volume for RR Donnelley & Sons has been 1,482,100 shares per day over the past 30 days. RR Donnelley & Sons has a market cap of $3.9 billion and is part of the diversified services industry. Shares are up 13.5% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
RR Donnelley & Sons
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income.
Highlights from the ratings report include:
- RRD's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues rose by 11.4%. 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 $468.80 million or 20.91% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.64%.
- DONNELLEY (R R) & SONS CO 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, DONNELLEY (R R) & SONS CO reported lower earnings of $0.58 versus $1.15 in the prior year. This year, the market expects an improvement in earnings ($1.60 versus $0.58).
- In its most recent trading session, RRD 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. 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.
- The debt-to-equity ratio is very high at 6.12 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Even though the debt-to-equity ratio is weak, RRD's quick ratio is somewhat strong at 1.08, demonstrating the ability to handle short-term liquidity needs.
- You can view the full RR Donnelley & Sons Ratings Report.
Dividend Yield: 6.80%
(NYSE:
) shares currently have a dividend yield of 6.80%.
Energy Transfer Partners, L.P. is engaged in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company has a P/E ratio of 37.02.
The average volume for Energy Transfer Partners has been 1,553,300 shares per day over the past 30 days. Energy Transfer Partners has a market cap of $20.6 billion and is part of the energy industry. Shares are down 8.5% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
Energy Transfer Partners
as a
. 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, notable return on equity and increase in stock price during the past year. 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 18.7%. Since the same quarter one year prior, revenues slightly increased by 2.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
- ENERGY TRANSFER PARTNERS -LP 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 year. We feel that this trend should continue. During the past fiscal year, ENERGY TRANSFER PARTNERS -LP turned its bottom line around by earning $1.65 versus -$0.24 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $1.65).
- 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 120.0% when compared to the same quarter one year prior, rising from -$541.00 million to $108.00 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. 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.
- 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. 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.
- You can view the full Energy Transfer Partners Ratings Report.
Dividend Yield: 4.40%
(NASDAQ:
) shares currently have a dividend yield of 4.40%.
People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers. The company has a P/E ratio of 17.94.
The average volume for People's United Financial has been 3,067,700 shares per day over the past 30 days. People's United Financial has a market cap of $4.6 billion and is part of the banking industry. Shares are down 0.3% year-to-date as of the close of trading on Friday.
TheStreet Ratings rates
People's United Financial
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, increase in stock price during the past year, growth in earnings per share and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.
Highlights from the ratings report include:
- PBCT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues slightly increased by 3.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.
- PEOPLE'S UNITED FINL INC has improved earnings per share by 15.8% 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, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.85 versus $0.74 in the prior year. This year, the market expects earnings to be in line with last year ($0.85 versus $0.85).
- The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 88.05%. Regardless of PBCT'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 18.67% trails the industry average.
- You can view the full People's United Financial Ratings Report.
Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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