Buy These Top 3 Buy-Rated Dividend Stocks Today: NNN, FE, HPT

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

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."

National Retail Properties

Dividend Yield: 4.70%

National Retail Properties (NYSE: NNN) shares currently have a dividend yield of 4.70%.

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 27.75.

The average volume for National Retail Properties has been 1,037,400 shares per day over the past 30 days. National Retail Properties has a market cap of $4.8 billion and is part of the real estate industry. Shares are down 7.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates National Retail Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and impressive record of earnings per share growth. 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:
  • NNN's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 11.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 24.6% when compared to the same quarter one year prior, going from $43.33 million to $53.98 million.
  • Net operating cash flow has increased to $97.14 million or 23.57% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.76%.
  • The gross profit margin for NATIONAL RETAIL PROPERTIES is rather high; currently it is at 59.44%. 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 46.45% significantly outperformed against the industry.
  • NATIONAL RETAIL PROPERTIES has improved earnings per share by 21.4% 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, NATIONAL RETAIL PROPERTIES increased its bottom line by earning $1.24 versus $1.06 in the prior year. For the next year, the market is expecting a contraction of 0.4% in earnings ($1.24 versus $1.24).

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FirstEnergy

Dividend Yield: 4.20%

FirstEnergy (NYSE: FE) shares currently have a dividend yield of 4.20%.

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. The company operates through Regulated Distribution, Regulated Transmission, and Competitive Energy Services segments. The company has a P/E ratio of 46.05.

The average volume for FirstEnergy has been 2,967,500 shares per day over the past 30 days. FirstEnergy has a market cap of $14.6 billion and is part of the utilities industry. Shares are down 11.5% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates FirstEnergy as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, growth in earnings per share, notable return on equity and increase in net income. We feel its 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:
  • Net operating cash flow has significantly increased by 309.78% to $193.00 million when compared to the same quarter last year. In addition, FIRSTENERGY CORP has also vastly surpassed the industry average cash flow growth rate of 11.84%.
  • FIRSTENERGY CORP reported significant earnings per share improvement 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, FIRSTENERGY CORP reported lower earnings of $0.50 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($2.60 versus $0.50).
  • FE, with its decline in revenue, slightly underperformed the industry average of 2.7%. Since the same quarter one year prior, revenues slightly dropped by 6.8%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Electric Utilities industry average, but is greater than that of the S&P 500. The net income increased by 6.7% when compared to the same quarter one year prior, going from $208.00 million to $222.00 million.
  • 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 Electric Utilities industry and the overall market on the basis of return on equity, FIRSTENERGY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.

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Hospitality Properties

Dividend Yield: 6.80%

Hospitality Properties (NYSE: HPT) shares currently have a dividend yield of 6.80%.

Hospitality Properties Trust, a real estate investment trust (REIT), engages in buying, owning, and leasing hotels. The company has a P/E ratio of 24.38.

The average volume for Hospitality Properties has been 738,600 shares per day over the past 30 days. Hospitality Properties has a market cap of $4.4 billion and is part of the real estate industry. Shares are down 5.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Hospitality Properties as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, reasonable valuation levels and good cash flow from operations. We feel its strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • HPT's revenue growth has slightly outpaced the industry average of 8.5%. Since the same quarter one year prior, revenues rose by 10.5%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HOSPITALITY PROPERTIES TRUST has improved earnings per share by 9.1% 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. During the past fiscal year, HOSPITALITY PROPERTIES TRUST increased its bottom line by earning $1.18 versus $0.73 in the prior year.
  • 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 Real Estate Investment Trusts (REITs) industry average. The net income increased by 10.7% when compared to the same quarter one year prior, going from $37.55 million to $41.58 million.
  • Net operating cash flow has increased to $96.06 million or 21.48% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 0.76%.

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