4 Buy-Rated Dividend Stocks: NNN, VZ, POM, EEP

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."

National Retail Properties

Dividend Yield: 4.90%

National Retail Properties (NYSE: NNN) shares currently have a dividend yield of 4.90%.

National Retail Properties, Inc. is a publicly owned equity real estate investment trust. The firm acquires, owns, manages, and develops retail properties in the United States. The company has a P/E ratio of 31.57

The average volume for National Retail Properties has been 1,246,900 shares per day over the past 30 days National Retail Properties has a market cap of $3.8 billion and is part of the real estate industry Shares are up 5.5% year to date as of the close of trading on Tuesday

TheStreet Ratings rates National Retail Properties as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, 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:
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Real Estate Investment Trusts (REITs) industry average. The net income increased by 14.2% when compared to the same quarter one year prior, going from $29.83 million to $34.07 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 12.1%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for NATIONAL RETAIL PROPERTIES is rather high; currently it is at 59.30%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.66% is above that of the industry average.
  • Net operating cash flow has increased to $68.82 million or 36.01% when compared to the same quarter last year. In addition, NATIONAL RETAIL PROPERTIES has also vastly surpassed the industry average cash flow growth rate of -16.12%.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Verizon Communications

Dividend Yield: 4.20%

Verizon Communications (NYSE: VZ) shares currently have a dividend yield of 4.20%.

Verizon Communications Inc., through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 122.80

The average volume for Verizon Communications has been 13,407,700 shares per day over the past 30 days Verizon Communications has a market cap of $145.8 billion and is part of the telecommunications industry Shares are up 16.6% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Verizon Communications as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins 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:
  • VZ's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Diversified Telecommunication Services industry average. The net income increased by 15.8% when compared to the same quarter one year prior, going from $1,686.00 million to $1,952.00 million.
  • Net operating cash flow has increased to $7,531.00 million or 26.42% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.78%.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 62.80%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 6.63% trails the industry average.
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Pepco Holdings

Dividend Yield: 5.50%

Pepco Holdings (NYSE: POM) shares currently have a dividend yield of 5.50%.

Pepco Holdings, Inc., through its subsidiaries, engages in the transmission, distribution, and supply of electricity. The company also distributes and supplies natural gas.

The average volume for Pepco Holdings has been 2,276,500 shares per day over the past 30 days Pepco Holdings has a market cap of $4.9 billion and is part of the utilities industry Shares are up 1.5% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Pepco Holdings as a buy. The company's strongest point has been its expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • POM, with its decline in revenue, underperformed when compared the industry average of 13.8%. Since the same quarter one year prior, revenues slightly dropped by 1.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • PEPCO HOLDINGS INC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, PEPCO HOLDINGS INC increased its bottom line by earning $1.22 versus $1.14 in the prior year. For the next year, the market is expecting a contraction of 7.8% in earnings ($1.13 versus $1.22).
  • In its most recent trading session, POM 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
  • The gross profit margin for PEPCO HOLDINGS INC is rather low; currently it is at 20.30%. Regardless of POM's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, POM's net profit margin of -35.10% significantly underperformed when compared to the industry average.
  • Net operating cash flow has significantly decreased to -$146.00 million or 734.78% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Enbridge Energy Partners

Dividend Yield: 7.50%

Enbridge Energy Partners (NYSE: EEP) shares currently have a dividend yield of 7.50%.

Enbridge Energy Partners, L.P. owns and operates crude oil and liquid petroleum transportation and storage assets; and natural gas gathering, treating, processing, transportation, and marketing assets in the United States. The company has a P/E ratio of 43.91

The average volume for Enbridge Energy Partners has been 938,100 shares per day over the past 30 days Enbridge Energy Partners has a market cap of $7.4 billion and is part of the energy industry Shares are up 5.6% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Enbridge Energy Partners as a buy. 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:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.7%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has decreased to $205.90 million or 20.03% when compared to the same quarter last year. Despite a decrease in cash flow of 20.03%, ENBRIDGE ENERGY PRTNRS -LP is in line with the industry average cash flow growth rate of -25.51%.
  • The gross profit margin for ENBRIDGE ENERGY PRTNRS -LP is currently lower than what is desirable, coming in at 27.60%. Regardless of EEP's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, EEP's net profit margin of -4.92% significantly underperformed when compared to the industry average.
  • The debt-to-equity ratio of 1.37 is relatively high when compared with the industry average, suggesting a need for better debt level management. To add to this, EEP has a quick ratio of 0.51, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ENBRIDGE ENERGY PRTNRS -LP's return on equity is significantly below that of the industry average and is below that of the S&P 500.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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