Best 4 Yielding Buy-Rated Stocks: ESV, PSEC, NHI, T

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."

Ensco

Dividend Yield: 6.00%

Ensco (NYSE: ESV) shares currently have a dividend yield of 6.00%.

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 9.06.

The average volume for Ensco has been 2,501,300 shares per day over the past 30 days. Ensco has a market cap of $11.8 billion and is part of the energy industry. Shares are down 14.1% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Ensco as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, growth in earnings per share 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:
  • ESV's revenue growth has slightly outpaced the industry average of 8.1%. 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.
  • Net operating cash flow has increased to $648.20 million or 12.33% when compared to the same quarter last year. In addition, ENSCO PLC has also vastly surpassed the industry average cash flow growth rate of -70.99%.
  • 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 ($6.21 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.

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

Prospect Capital Corporation

Dividend Yield: 12.20%

Prospect Capital Corporation (NASDAQ: PSEC) shares currently have a dividend yield of 12.20%.

Prospect Capital Corporation is a business development company. The company has a P/E ratio of 9.97.

The average volume for Prospect Capital Corporation has been 2,916,400 shares per day over the past 30 days. Prospect Capital Corporation has a market cap of $3.1 billion and is part of the financial services industry. Shares are down 4.4% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Prospect Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, compelling growth in net income, expanding profit margins and good 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:
  • The revenue growth greatly exceeded the industry average of 15.2%. Since the same quarter one year prior, revenues rose by 30.2%. 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 significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 69.1% when compared to the same quarter one year prior, rising from $47.25 million to $79.90 million.
  • The gross profit margin for PROSPECT CAPITAL CORP is rather high; currently it is at 68.15%. Regardless of PSEC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PSEC's net profit margin of 49.61% significantly outperformed against the industry.
  • Net operating cash flow has significantly increased by 50.05% to -$245.45 million when compared to the same quarter last year. Despite an increase in cash flow of 50.05%, PROSPECT CAPITAL CORP is still growing at a significantly lower rate than the industry average of 254.30%.

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

National Health Investors

Dividend Yield: 4.90%

National Health Investors (NYSE: NHI) shares currently have a dividend yield of 4.90%.

National Health Investors, Inc., a real estate investment trust (REIT), invests in health care properties, primarily in the long-term care industry in the United States. The company has a P/E ratio of 20.65.

The average volume for National Health Investors has been 230,100 shares per day over the past 30 days. National Health Investors has a market cap of $2.1 billion and is part of the real estate industry. Shares are up 10.1% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates National Health Investors as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 9.7%. Since the same quarter one year prior, revenues rose by 31.3%. 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 Real Estate Investment Trusts (REITs) industry and the overall market, NATIONAL HEALTH INVESTORS's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for NATIONAL HEALTH INVESTORS is currently very high, coming in at 82.60%. It has increased significantly from the same period last year. Along with this, the net profit margin of 133.69% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $26.49 million or 21.15% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -0.44%.
  • NATIONAL HEALTH INVESTORS 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, NATIONAL HEALTH INVESTORS increased its bottom line by earning $2.68 versus $2.64 in the prior year. This year, the market expects an improvement in earnings ($2.71 versus $2.68).

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

AT&T

Dividend Yield: 5.50%

AT&T (NYSE: T) shares currently have a dividend yield of 5.50%.

AT&T Inc. provides telecommunications services to consumers and businesses in the United States and internationally. The company operates through Wireless, Wireline, and Other segments. The company has a P/E ratio of 9.83.

The average volume for AT&T has been 23,120,200 shares per day over the past 30 days. AT&T has a market cap of $175.5 billion and is part of the telecommunications industry. Shares are down 9.1% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates AT&T as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, notable return on equity, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • T's revenue growth has slightly outpaced the industry average of 1.0%. Since the same quarter one year prior, revenues slightly increased by 1.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, AT&T INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for AT&T INC is rather high; currently it is at 63.10%. It has increased significantly from the same period last year. Along with this, the net profit margin of 20.84% is above that of the industry average.
  • The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is less than that of the Diversified Telecommunication Services industry average. The net income increased by 279.2% when compared to the same quarter one year prior, rising from -$3,857.00 million to $6,913.00 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.82, 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 0.46 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.

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