Top 3 Yielding Buy-Rated Stocks: LAMR, TLLP, VZ

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."

Lamar Advertising

Dividend Yield: 4.40%

Lamar Advertising (NASDAQ: LAMR) shares currently have a dividend yield of 4.40%.

Lamar Advertising Company is a publicly owned equity real estate investment trust. The firm primarily engages in selling advertising space on billboards, buses, shelters, benches, and logo plates. Lamar Advertising Company was founded in 1902 and is headquartered in Baton Rouge, Louisiana. The company has a P/E ratio of 23.98.

The average volume for Lamar Advertising has been 519,000 shares per day over the past 30 days. Lamar Advertising has a market cap of $6.6 billion and is part of the real estate industry. Shares are up 13.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Lamar Advertising as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share, increase in net income and expanding profit margins. We feel its strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • LAMR's revenue growth has slightly outpaced the industry average of 10.4%. Since the same quarter one year prior, revenues rose by 11.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • LAMAR ADVERTISING CO has improved earnings per share by 26.2% 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, LAMAR ADVERTISING CO increased its bottom line by earning $2.71 versus $2.66 in the prior year. This year, the market expects an improvement in earnings ($3.10 versus $2.71).
  • 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 26.0% when compared to the same quarter one year prior, rising from $40.72 million to $51.31 million.
  • The gross profit margin for LAMAR ADVERTISING CO is rather high; currently it is at 62.29%. Regardless of LAMR'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 15.15% trails the industry average.

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Tesoro Logistics

Dividend Yield: 6.80%

Tesoro Logistics (NYSE: TLLP) shares currently have a dividend yield of 6.80%.

Tesoro Logistics LP owns, operates, develops, and acquires logistics assets related to crude oil and refined products in the United States. It operates in three segments: Gathering, Processing, and Terminalling and Transportation. The company has a P/E ratio of 21.09.

The average volume for Tesoro Logistics has been 473,800 shares per day over the past 30 days. Tesoro Logistics has a market cap of $4.6 billion and is part of the energy industry. Shares are down 3.1% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Tesoro Logistics as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and growth in earnings per share. We feel its 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 24.1%. Since the same quarter one year prior, revenues rose by 14.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TESORO LOGISTICS LP's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 53.3% when compared to the same quarter one year prior, rising from $60.00 million to $92.00 million.
  • Net operating cash flow has slightly increased to $161.00 million or 5.92% when compared to the same quarter last year. In addition, TESORO LOGISTICS LP has also vastly surpassed the industry average cash flow growth rate of -49.98%.
  • TESORO LOGISTICS LP'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 year. We feel that this trend should continue. During the past fiscal year, TESORO LOGISTICS LP increased its bottom line by earning $2.34 versus $1.42 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $2.34).

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Verizon Communications

Dividend Yield: 4.10%

Verizon Communications (NYSE: VZ) shares currently have a dividend yield of 4.10%.

Verizon Communications Inc., through its subsidiaries, provides communications, information, and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 15.45.

The average volume for Verizon Communications has been 13,177,400 shares per day over the past 30 days. Verizon Communications has a market cap of $223.6 billion and is part of the telecommunications industry. Shares are up 19.9% year-to-date as of the close of trading on Friday.

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TheStreet Ratings rates Verizon Communications as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and notable return on equity. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period, despite the company's weak earnings results. 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.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 59.97%. Regardless of VZ'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 2.29% trails the industry average.
  • VZ, with its decline in revenue, underperformed when compared the industry average of 16.9%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Diversified Telecommunication Services industry and the overall market, VERIZON COMMUNICATIONS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • VERIZON COMMUNICATIONS INC 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. 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, VERIZON COMMUNICATIONS INC increased its bottom line by earning $4.37 versus $2.51 in the prior year. For the next year, the market is expecting a contraction of 10.6% in earnings ($3.91 versus $4.37).

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