Best Of The Buy-Rated Dividend Stocks: Top 3 Companies: UBSI, PPL, VIV

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 which could 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 3 stocks with substantial yields, that ultimately, we have rated "Buy."

United Bankshares

Dividend Yield: 4.20%

United Bankshares (NASDAQ: UBSI) shares currently have a dividend yield of 4.20%.

United Bankshares, Inc., through its subsidiaries, provides commercial and retail banking services and products in the United States. The company has a P/E ratio of 18.24.

The average volume for United Bankshares has been 426,500 shares per day over the past 30 days. United Bankshares has a market cap of $2.1 billion and is part of the banking industry. Shares are down 3.4% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates United Bankshares as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • The gross profit margin for UNITED BANKSHARES INC/WV is currently very high, coming in at 85.73%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.92% significantly outperformed against the industry average.
  • UNITED BANKSHARES INC/WV's earnings per share declined by 7.1% 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, UNITED BANKSHARES INC/WV increased its bottom line by earning $1.70 versus $1.64 in the prior year. This year, the market expects an improvement in earnings ($1.87 versus $1.70).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.8%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • Net operating cash flow has decreased to $35.45 million or 11.88% when compared to the same quarter last year. Despite a decrease in cash flow of 11.88%, UNITED BANKSHARES INC/WV is still significantly exceeding the industry average of -85.68%.

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: 4.50%

PPL (NYSE: PPL) shares currently have a dividend yield of 4.50%.

PPL Corporation, an energy and utility holding company, generates, transmits, distributes, and sells electricity to wholesale and retail customers in the Pennsylvania, Kentucky, Virginia, Tennessee, and the United Kingdom. The company operates in four segments: Kentucky Regulated, U.K. The company has a P/E ratio of 18.64.

The average volume for PPL has been 4,449,500 shares per day over the past 30 days. PPL has a market cap of $20.9 billion and is part of the utilities industry. Shares are up 9.5% 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 expanding profit margins, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 38.03% is the gross profit margin for PPL CORP which we consider to be strong. 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 -3.44% is in-line with the industry average.
  • PPL CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, PPL CORP reported lower earnings of $1.74 versus $2.61 in the prior year. This year, the market expects an improvement in earnings ($2.15 versus $1.74).
  • PPL, with its decline in revenue, underperformed when compared the industry average of 3.1%. Since the same quarter one year prior, revenues slightly dropped by 8.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, PPL 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.

Telefonica Brasil S.A

Dividend Yield: 7.40%

Telefonica Brasil S.A (NYSE: VIV) shares currently have a dividend yield of 7.40%.

Telefonica Brasil S.A. provides fixed-line telecommunications services to residential and commercial customers in Brazil. The company has a P/E ratio of 6.48.

The average volume for Telefonica Brasil S.A has been 2,345,700 shares per day over the past 30 days. Telefonica Brasil S.A has a market cap of $23.4 billion and is part of the telecommunications industry. Shares are up 6.4% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Telefonica Brasil S.A as a buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, 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 has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The gross profit margin for TELEFONICA BRASIL SA is rather high; currently it is at 64.32%. 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 14.45% trails the industry average.
  • VIV's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.91 is somewhat weak and could be cause for future problems.
  • VIV, with its decline in revenue, underperformed when compared the industry average of 1.0%. Since the same quarter one year prior, revenues fell by 25.7%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of TELEFONICA BRASIL SA has not done very well: it is down 22.69% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.

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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