4 Buy-Rated Dividend Stocks: ETR, HME, LO, PBCT

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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 and 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 4 stocks with substantial yields, that ultimately, we have rated "Buy."

Entergy

Dividend Yield: 4.70%

Entergy (NYSE: ETR) shares currently have a dividend yield of 4.70%.

Entergy Corporation, together with its subsidiaries, engages in the electric power production and retail electric distribution operations in the United States. The company generates electricity through various sources, such as gas/oil, nuclear, coal, and hydro power. The company has a P/E ratio of 10.78.

The average volume for Entergy has been 1,435,100 shares per day over the past 30 days. Entergy has a market cap of $12.5 billion and is part of the utilities industry. Shares are up 10.3% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Entergy as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, reasonable valuation levels, 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 213.8% when compared to the same quarter one year prior, rising from -$146.74 million to $166.98 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 13.0%. Since the same quarter one year prior, revenues slightly increased by 9.4%. Growth in the company's revenue appears to have helped boost the 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. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, ENTERGY CORP has outperformed in comparison with the industry average, but has underperformed when compared to 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. 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.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Home Properties

Dividend Yield: 4.20%

Home Properties (NYSE: HME) shares currently have a dividend yield of 4.20%.

Home Properties, Inc. is an independent real estate investment trust. The firm invests in the real estate markets of the United States. It is engaged in the ownership, management, acquisition, rehabilitation and development of residential apartment communities. The company has a P/E ratio of 47.82.

The average volume for Home Properties has been 370,700 shares per day over the past 30 days. Home Properties has a market cap of $3.5 billion and is part of the real estate industry. Shares are up 7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Home Properties as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, reasonable valuation levels, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

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 237.1% when compared to the same quarter one year prior, rising from $15.39 million to $51.88 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.0%. Since the same quarter one year prior, revenues slightly increased by 9.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $75.65 million or 24.00% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.78%.
  • 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. 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.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Lorillard

Dividend Yield: 5.00%

Lorillard (NYSE: LO) shares currently have a dividend yield of 5.00%.

Lorillard, Inc. manufactures and sells cigarettes in the United States. The company operates through two segments, Cigarettes and Electronic Cigarettes. The Cigarettes segment manufactures and sells cigarettes. The company has a P/E ratio of 14.14.

The average volume for Lorillard has been 3,237,900 shares per day over the past 30 days. Lorillard has a market cap of $16.6 billion and is part of the tobacco industry. Shares are up 12.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Lorillard as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, increase in net income, revenue growth, expanding profit margins and good cash flow from operations. 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:
  • LORILLARD 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, LORILLARD INC increased its bottom line by earning $2.81 versus $2.67 in the prior year. This year, the market expects an improvement in earnings ($3.11 versus $2.81).
  • 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 Tobacco industry average. The net income increased by 47.1% when compared to the same quarter one year prior, rising from $223.00 million to $328.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.9%. Since the same quarter one year prior, revenues slightly increased by 5.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for LORILLARD INC is rather high; currently it is at 64.50%. It has increased significantly from the same period last year. Along with this, the net profit margin of 29.23% is above that of the industry average.
  • Net operating cash flow has slightly increased to $699.00 million or 1.30% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.93%.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

People's United Financial

Dividend Yield: 4.60%

People's United Financial (NASDAQ: PBCT) shares currently have a dividend yield of 4.60%.

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 20.06.

The average volume for People's United Financial has been 3,405,300 shares per day over the past 30 days. People's United Financial has a market cap of $4.7 billion and is part of the banking industry. Shares are up 17.8% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates People's United Financial as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, increase in stock price during the past year, 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:
  • 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. 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's earnings per share declined by 5.9% 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, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.72 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.77 versus $0.72).
  • The revenue fell significantly faster than the industry average of 40.6%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 87.40%. 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, PBCT's net profit margin of 15.83% is significantly lower than the industry average.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Other helpful dividend tools from TheStreet:

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

null

More from Markets

Billionaire Investor Tim Draper Explains Why Bitcoin Will Hit $250,000 in 2022

Billionaire Investor Tim Draper Explains Why Bitcoin Will Hit $250,000 in 2022

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

To Think a Trade War's Still Just a Threat Is the Dumbest Thing on Wall Street

M&A Trends Still on Investors' Minds Despite Worries Over Tariffs -- ICYMI

M&A Trends Still on Investors' Minds Despite Worries Over Tariffs -- ICYMI

Dow Falls as U.S. Imposes Tariffs on $50 Billion of Chinese Goods

Dow Falls as U.S. Imposes Tariffs on $50 Billion of Chinese Goods

General Motors Spikes on Report It's Considering Listing Shares of Cruise Unit

General Motors Spikes on Report It's Considering Listing Shares of Cruise Unit