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High Yield Stocks with Very Bullish Equity Summary Scores

The list below highlights high yield dividend stocks with a very bullish equity summary score between 9.1 to 10.  These stocks are also rated a buy or hold by S&P stock ratings.  The following is a summary of most recent research notes for the top stocks from this list.

Telecom Italia SpA (TI) – Q3 revenues were up 3.7% and EBITDA was up 0.8%, stronger than we  expected. Results improved at the Italian domestic operations where the  pace of decline eased, with revenues down 2.8% and EBITDA down 2.5%, vs.  respective Q2 declines of 5.1% and 4.8%. While we expect revenues in  Italy to fall about 2.5% in ’12, we expect operations in Brazil and  Argentina to continue to perform well. To reflect the weakening of the  Euro vs. the U.S. dollar, we lower our operating earnings per ADS  estimates $0.16 to $1.40 for ’11 and by $0.30 to $1.40 for ’12. Our  target price remains $13.
AstraZeneca PLC  (AZN) – Q3 earnings per ADS of $1.70, vs. $1.50, surpassed our $1.46 estimate.  We attribute the beat to higher than expected sales, and reductions in  interest expense and taxes. A $5B share buyback also lowered the share  count. In view of the strong Q3, we raise our ’11 ADS profit forecast to  $7.30 from $7.12. While Q4 Crestor sales are likely to be hurt by  generic Lipitor and slowing trends in Brazil, we think long-term  prospects remain favorable, aided by an expanding new drug portfolio. We  raise our target price by $2 to $52, based on revised DCF and forward  P/E assumptions.
Total SA (TOT) – We think TOT has performed well, despite flat Q3 production on a slow  ramp of new projects. TOT merged Refining/Chemicals and plans to trim  European refining. It is negotiating with labor unions to restructure  downstream in ’12. Production growth target is 2.5% in ’11, on its 12%  acquisition of Novatek. We see new volumes from Nigeria and Angola and  more aggressive exploration. We believe pending Shtokman deal will pass  when Russia implements a more competitive fiscal regime. We lift our ’11  GAAP EPS estimate $0.40 to $8.25 and ’12’s by $0.80 to $8.70. Dividend  yields 5.65%.
Plains All American Pipeline LP  (PAA) – The proposed acquisition of Canadian NGL and LPG assets from BP plc (BP  43, Hold) for $1.67B is expected to boost PAA’s ’12 distribution payout  8%-9% ($3.98 currently). Also, PAA has entered or completed 4 other  deals for a total of $620M, focused on South Texas oil. Separately, and  before acquisitions, PAA sees Q4 EBITDA exceeding guidance of $410M by  10%-15%, and we lift our ’11 earnings per unit forecast $0.22 to $4.90.  Based on a target yield of 5.4%, in line with peers, and a ’12  distribution growth target of 4%-5% before acquisitions, we up our  target price by $3 to $76.
Vodafone Group PLC (VOD) – Recent results have shown improving trends in VOD’s emerging market  growth engines India and South Africa and signs of a turnaround in its  more mature European business. We believe revenue momentum and good cost  control will enable VOD to beat its EBIT guidance for FY 12 (Mar). As we  roll forward our DCF analysis, we are raising our 12-month target price  on the ADSs by $2 to $34. Combined with an above-average dividend yield  that we see as well supported by cash flow, we view VOD as compelling.

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