Buy-Rated Dividend Stocks In The Top 4: ED, PEG, HIW, PPL

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 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."

Consolidated Edison

Dividend Yield: 4.20%

Consolidated Edison (NYSE: ED) shares currently have a dividend yield of 4.20%.

Consolidated Edison, Inc., through its subsidiaries, engages in regulated electric, gas, and steam delivery businesses. The company has a P/E ratio of 16.54.

The average volume for Consolidated Edison has been 2,057,100 shares per day over the past 30 days. Consolidated Edison has a market cap of $17.0 billion and is part of the utilities industry. Shares are up 4.8% year to date as of the close of trading on Monday.

TheStreet Ratings rates Consolidated Edison as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, increase in net income, growth in earnings per share and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • ED's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 1.3%. 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 Multi-Utilities industry average, but is less than that of the S&P 500. The net income increased by 5.5% when compared to the same quarter one year prior, going from $440.00 million to $464.00 million.
  • CONSOLIDATED EDISON INC has improved earnings per share by 6.0% 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, CONSOLIDATED EDISON INC increased its bottom line by earning $3.86 versus $3.57 in the prior year. For the next year, the market is expecting a contraction of 2.8% in earnings ($3.75 versus $3.86).
  • In its most recent trading session, ED 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 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.

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

Public Service Enterprise Group

Dividend Yield: 4.20%

Public Service Enterprise Group (NYSE: PEG) shares currently have a dividend yield of 4.20%.

Public Service Enterprise Group Incorporated, through its subsidiaries, operates as an energy company primarily in the northeastern and mid Atlantic United States. The company has a P/E ratio of 13.63.

The average volume for Public Service Enterprise Group has been 2,880,500 shares per day over the past 30 days. Public Service Enterprise Group has a market cap of $17.2 billion and is part of the utilities industry. Shares are up 11.6% year to date as of the close of trading on Monday.

TheStreet Ratings rates Public Service Enterprise Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 40.13% is the gross profit margin for PUBLIC SERVICE ENTRP GRP INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 15.27% is above that of the industry average.
  • Net operating cash flow has increased to $1,092.00 million or 17.04% when compared to the same quarter last year. Despite an increase in cash flow, PUBLIC SERVICE ENTRP GRP INC's average is still marginally south of the industry average growth rate of 24.26%.
  • The debt-to-equity ratio is somewhat low, currently at 0.75, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.47 is very weak and demonstrates a lack of ability to pay short-term obligations.

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

Highwoods Properties

Dividend Yield: 4.60%

Highwoods Properties (NYSE: HIW) shares currently have a dividend yield of 4.60%.

Highwoods Properties, Inc. is a real estate investment trust. The trust engages in leasing, management, development, construction, and other customer-related services for its properties and for third parties. It invests in the real estate markets of United States. The company has a P/E ratio of 49.45.

The average volume for Highwoods Properties has been 704,500 shares per day over the past 30 days. Highwoods Properties has a market cap of $3.3 billion and is part of the real estate industry. Shares are up 9.6% year to date as of the close of trading on Monday.

TheStreet Ratings rates Highwoods Properties as a buy. 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, reasonable valuation levels and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • HIW's revenue growth has slightly outpaced the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 15.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HIGHWOODS PROPERTIES 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 year. We feel that this trend should continue. During the past fiscal year, HIGHWOODS PROPERTIES INC increased its bottom line by earning $0.53 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.53).
  • 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 58.8% when compared to the same quarter one year prior, rising from $33.98 million to $53.98 million.
  • Net operating cash flow has significantly increased by 55.70% to $69.59 million when compared to the same quarter last year. In addition, HIGHWOODS PROPERTIES INC has also vastly surpassed the industry average cash flow growth rate of 1.41%.

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

PPL

Dividend Yield: 4.70%

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

PPL Corporation, an energy and utility holding company, engages in the generation, transmission, distribution, and sale of electricity to wholesale and retail customers in the United States and the United Kingdom. The company operates in four segments: Kentucky Regulated, U.K. The company has a P/E ratio of 12.43.

The average volume for PPL has been 4,782,000 shares per day over the past 30 days. PPL has a market cap of $19.6 billion and is part of the utilities industry. Shares are up 7.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates PPL as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in stock price during the past year, expanding profit margins and attractive valuation levels. 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 1.7%. Since the same quarter one year prior, revenues rose by 30.1%. 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 $1,276.00 million or 11.24% when compared to the same quarter last year. In addition, PPL CORP has also modestly surpassed the industry average cash flow growth rate of 2.69%.
  • 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.
  • 37.43% is the gross profit margin for PPL CORP which we consider to be strong. Regardless of PPL'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 13.11% trails the industry average.

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

Other helpful dividend tools from TheStreet:
null

If you liked this article you might like

Maybe This Is Not Really About Inflation -- Market Recon

Maybe This Is Not Really About Inflation -- Market Recon

Duke Energy, Dominion, AT&T: 'Mad Money' Lightning Round

Duke Energy, Dominion, AT&T: 'Mad Money' Lightning Round

Buy Gradually on the Way Down: Cramer's 'Mad Money' Recap (Tuesday 1/30/18)

Buy Gradually on the Way Down: Cramer's 'Mad Money' Recap (Tuesday 1/30/18)

Splunk, Southern Company, LAM Research: 'Mad Money' Lightning Round

Splunk, Southern Company, LAM Research: 'Mad Money' Lightning Round

Don't Miss This Chance to Buy: Cramer's 'Mad Money' Recap (Monday 1/22/18)

Don't Miss This Chance to Buy: Cramer's 'Mad Money' Recap (Monday 1/22/18)