What To Buy: Top 5 Buy-Rated Dividend Stocks: ESV, SIX, SO, WPZ, NNN

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

Ensco

Dividend Yield: 5.40%

Ensco (NYSE: ESV) shares currently have a dividend yield of 5.40%.

Ensco plc provides offshore contract drilling services to the oil and gas industry worldwide. The company operates through three segments: Floaters, Jackups, and Other. The company has a P/E ratio of 9.98.

The average volume for Ensco has been 2,219,800 shares per day over the past 30 days. Ensco has a market cap of $13.0 billion and is part of the energy industry. Shares are down 7.2% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Ensco as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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:
  • ESV's revenue growth has slightly outpaced the industry average of 9.2%. Since the same quarter one year prior, revenues rose by 12.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • ENSCO PLC's earnings per share improvement from the most recent quarter was slightly positive. 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, ENSCO PLC increased its bottom line by earning $5.24 versus $2.91 in the prior year. This year, the market expects an improvement in earnings ($6.27 versus $5.24).
  • The gross profit margin for ENSCO PLC is rather high; currently it is at 51.10%. Regardless of ESV's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ESV's net profit margin of 29.91% significantly outperformed against the industry.
  • Net operating cash flow has increased to $648.20 million or 12.33% when compared to the same quarter last year. Despite an increase in cash flow, ENSCO PLC's cash flow growth rate is still lower than the industry average growth rate of 30.69%.
  • Despite currently having a low debt-to-equity ratio of 0.38, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.17 is sturdy.

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

Six Flags Entertainment

Dividend Yield: 5.30%

Six Flags Entertainment (NYSE: SIX) shares currently have a dividend yield of 5.30%.

Six Flags Entertainment Corporation owns and operates regional theme, water, and zoological parks. The company's parks offer various state-of-the-art and traditional thrill rides, water attractions, themed areas, concerts and shows, restaurants, game venues, and retail outlets. The company has a P/E ratio of 15.36.

The average volume for Six Flags Entertainment has been 643,800 shares per day over the past 30 days. Six Flags Entertainment has a market cap of $3.4 billion and is part of the leisure industry. Shares are up 17.2% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Six Flags Entertainment as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in stock price during the past year 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:
  • SIX's revenue growth has slightly outpaced the industry average of 0.6%. Since the same quarter one year prior, revenues slightly increased by 4.0%. 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.
  • The gross profit margin for SIX FLAGS ENTERTAINMENT CORP is rather high; currently it is at 66.10%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 23.86% significantly outperformed against the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. In comparison to other companies in the Hotels, Restaurants & Leisure industry and the overall market on the basis of return on equity, SIX FLAGS ENTERTAINMENT CORP has underperformed in comparison with the industry average, but has greatly exceeded 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • SIX FLAGS ENTERTAINMENT CORP's earnings per share declined by 43.6% 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, SIX FLAGS ENTERTAINMENT CORP turned its bottom line around by earning $3.04 versus -$0.25 in the prior year. For the next year, the market is expecting a contraction of 71.4% in earnings ($0.87 versus $3.04).

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

Southern

Dividend Yield: 5.00%

Southern (NYSE: SO) shares currently have a dividend yield of 5.00%.

The Southern Company, together with its subsidiaries, operates as a public electric utility company. The company has a P/E ratio of 22.17.

The average volume for Southern has been 5,690,300 shares per day over the past 30 days. Southern has a market cap of $36.0 billion and is part of the utilities industry. Shares are down 4.1% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Southern as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • Net operating cash flow has slightly increased to $2,464.00 million or 7.73% when compared to the same quarter last year. In addition, SOUTHERN CO has also modestly surpassed the industry average cash flow growth rate of 3.19%.
  • SOUTHERN CO's earnings per share declined by 12.6% 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 $2.67 versus $2.55 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $2.67).
  • 42.28% is the gross profit margin for SOUTHERN CO which we consider to be strong. Regardless of SO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SO's net profit margin of 17.32% compares favorably to the industry average.
  • SO, with its decline in revenue, slightly underperformed the industry average of 1.9%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.17, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.40 is very low and demonstrates very weak liquidity.

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

Williams Partners

Dividend Yield: 7.20%

Williams Partners (NYSE: WPZ) shares currently have a dividend yield of 7.20%.

Williams Partners L.P., an energy infrastructure company, focuses on connecting North America's hydrocarbon resource plays to growing markets for natural gas and natural gas liquids (NGL). It operates in two segments, Gas Pipeline and Midstream Gas & Liquids. The company has a P/E ratio of 27.85.

The average volume for Williams Partners has been 620,200 shares per day over the past 30 days. Williams Partners has a market cap of $21.5 billion and is part of the chemicals industry. Shares are up 0.7% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates Williams Partners as a buy. The company's strengths can be seen in multiple areas, such as its 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 somewhat disappointing return on equity.

Highlights from the ratings report include:
  • Net operating cash flow has increased to $482.00 million or 33.14% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.10%.
  • 39.53% is the gross profit margin for WILLIAMS PARTNERS LP which we consider to be strong. Regardless of WPZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WPZ's net profit margin of 17.59% significantly outperformed against the industry.
  • WPZ, with its decline in revenue, slightly underperformed the industry average of 5.4%. Since the same quarter one year prior, revenues slightly dropped by 7.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • 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.
  • WILLIAMS PARTNERS LP has improved earnings per share by 36.8% 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, WILLIAMS PARTNERS LP reported lower earnings of $1.94 versus $3.68 in the prior year. For the next year, the market is expecting a contraction of 14.4% in earnings ($1.66 versus $1.94).

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

National Retail Properties

Dividend Yield: 5.30%

National Retail Properties (NYSE: NNN) shares currently have a dividend yield of 5.30%.

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 30.12.

The average volume for National Retail Properties has been 1,431,300 shares per day over the past 30 days. National Retail Properties has a market cap of $3.7 billion and is part of the real estate industry. Shares are down 2.5% year-to-date as of the close of trading on Friday.

TheStreet Ratings rates National Retail Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and compelling growth in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • NNN's revenue growth has slightly outpaced the industry average of 9.6%. Since the same quarter one year prior, revenues rose by 13.4%. 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 $90.89 million or 26.57% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.47%.
  • The gross profit margin for NATIONAL RETAIL PROPERTIES is rather high; currently it is at 62.68%. Regardless of NNN's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NNN's net profit margin of 43.76% significantly outperformed against the industry.
  • NATIONAL RETAIL PROPERTIES's earnings per share declined by 12.5% 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, NATIONAL RETAIL PROPERTIES increased its bottom line by earning $1.03 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $1.03).
  • The net income growth from the same quarter one year ago has exceeded that of the Real Estate Investment Trusts (REITs) industry average, but is less than that of the S&P 500. The net income increased by 16.7% when compared to the same quarter one year prior, going from $38.02 million to $44.35 million.

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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