Each month we sort through the 1,300 stocks that have a dividend yield of 3% or more to find the top dividend stocks. We rate dividend stocks based on yield, dividend growth and performance. We use each stocks dividend fundamentals to come up with what we call our best dividend stocks list.
We enjoy highlighting our favorite dividends stocks for our Seeking Alpha readers. Today we are taking our top 100 list and highlighting five of our top rated dividend stocks with analyst buy ratings. Each of these stocks has a dividend yield over 3%, a 5-year dividend growth rate over 3% and a positive return over the last 12 months. They also have a buy rating from analysts and an upgrade in the last 12 months.
NextEra Entergy (NYSE:NEE)
NextEra Energy is a North American electric power company that produces renewable energy from wind and solar projects. NEE has a slight tilt towards a buy rating with 13 buy ratings and 11 holds. RBC Capital Markets initiated coverage in June 2011 with an outperform rating.
We have it rated as 98/100 due to its high dividend yield of 3.8%, 5 year dividend growth rate of 7.9% and low payout ratio of 60%. NextEra Energy has raised its dividend for the last 15 years and has a one-year return of 9%.
Digital Realty Trust (NYSE:DLR)
Digital Realty Trust is a physical property REIT that owns and manages technology related properties. DLR has 13 buy ratings, 3 hold and 1 sell rating. FBR capital most recently upgraded the stock in April of 2011.
We rated Digital Realty Trust a 98/100 for its high dividend yield of 4%, strong 5 year dividend growth rate of 20.2% and one-year return of 19.4%. DLR has increased its dividend for 5 years in a row.
Kraft Foods (KFT)
Kraft Foods makes packaged food products that are sold and distributed in 170 countries. KFT has 14 buy ratings and 5 hold ratings. It was most recently upgraded by Argus in June of 2011.
We gave Kraft a 96/100. Although it has a 5 year dividend growth rate over 4%, it has not raised its dividend since 2008. KFT has a dividend yield of 3.2% and a payout ratio of 63%. KFT stock has risen almost 18% over the last year.
AT&T Inc. (NYSE:T)
AT&T is a international telecommunications company that offers a wide range of telecom and business services to various clients. AT&T has 16 buy ratings, 17 hold ratings and no sell ratings making it an overall buy. IT was upgrade twice in March of 2011 by Robert Baird and HSBC Securities.
We have AT&T a rating of 93/100. The only thing holding it back is its high payout ratio of 87%. T has a dividend yield of 5.9% and a 5 year dividend growth rate of 5.35%. It has raised their dividend for the last 6 years.
The Southern Company (NYSE:SO)
The Southern Company owns a group of public utility companies that provide power to Southern US States. SO squeaks into a buy rating with 8 buy ratings, 13 holds and 2 sell ratings. Hilliard Tysons upgraded SO to a buy on August 2, 2011.
We gave SO a 92/100 for its high dividend yield of 4.2% and its 9 years of consecutive dividend increases. Its payout ratio is a little high at 77%, which keeps it from receiving a higher rating from us. SO has risen 16.3% in the last 12 months.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.