3 Buy-Rated Dividend Stocks: NTI, BCE, VZ

These 3 dividend stocks are rated a Buy by TheStreet
By TheStreet Wire ,

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."

Northern Tier Energy

Dividend Yield: 15.80%

Northern Tier Energy

(NYSE:

NTI

) shares currently have a dividend yield of 15.80%.

Northern Tier Energy LP, an independent downstream energy company, engages in refining, retail, and pipeline operations in the United States. It operates through two segments, Refining and Retail. The company has a P/E ratio of 6.82.

The average volume for Northern Tier Energy has been 692,000 shares per day over the past 30 days. Northern Tier Energy has a market cap of $2.4 billion and is part of the energy industry. Shares are up 19.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

Northern Tier Energy

as a

buy

. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, notable return on equity, attractive valuation levels and good cash flow from operations. 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:

  • NORTHERN TIER ENERGY LP has improved earnings per share by 6.7% 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, NORTHERN TIER ENERGY LP increased its bottom line by earning $2.60 versus $2.52 in the prior year. This year, the market expects an improvement in earnings ($4.34 versus $2.60).
  • 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 7.6% when compared to the same quarter one year prior, going from $96.20 million to $103.50 million.
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, NORTHERN TIER ENERGY LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 679.18% to $114.10 million when compared to the same quarter last year. In addition, NORTHERN TIER ENERGY LP has also vastly surpassed the industry average cash flow growth rate of -26.28%.

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BCE

Dividend Yield: 4.50%

BCE

(NYSE:

BCE

) shares currently have a dividend yield of 4.50%.

BCE Inc., a telecommunications and media company, provides wireless, wireline, Internet, and television (TV) services to residential, business, and wholesale customers in Canada. The company operates through Bell Wireless, Bell Wireline, and Bell Media segments. The company has a P/E ratio of 19.04.

The average volume for BCE has been 955,200 shares per day over the past 30 days. BCE has a market cap of $36.8 billion and is part of the telecommunications industry. Shares are down 4.2% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates

BCE

as a

buy

. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, growth in earnings per share 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:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 23.1% when compared to the same quarter one year prior, going from $631.00 million to $777.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 2.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • BCE INC has improved earnings per share by 13.0% 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 year. During the past fiscal year, BCE INC increased its bottom line by earning $2.97 versus $2.54 in the prior year.
  • 49.49% is the gross profit margin for BCE INC which we consider to be strong. Regardless of BCE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BCE's net profit margin of 14.53% compares favorably to the industry average.
  • BCE has underperformed the S&P 500 Index, declining 7.55% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

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Verizon Communications

Dividend Yield: 5.00%

Verizon Communications

(NYSE:

VZ

) shares currently have a dividend yield of 5.00%.

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 18.60.

The average volume for Verizon Communications has been 15,110,400 shares per day over the past 30 days. Verizon Communications has a market cap of $184.6 billion and is part of the telecommunications industry. Shares are down 2.2% year-to-date as of the close of trading on Thursday.

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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 increase in net income, revenue growth, good cash flow from operations, growth in earnings per share and expanding profit margins. 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:

  • 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 Diversified Telecommunication Services industry average. The net income increased by 9.3% when compared to the same quarter one year prior, going from $3,695.00 million to $4,038.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.8%. Since the same quarter one year prior, revenues slightly increased by 5.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • Net operating cash flow has increased to $9,520.00 million or 13.97% when compared to the same quarter last year. In addition, VERIZON COMMUNICATIONS INC has also modestly surpassed the industry average cash flow growth rate of 11.31%.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 11.2% 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, VERIZON COMMUNICATIONS INC reported lower earnings of $2.51 versus $4.00 in the prior year. This year, the market expects an improvement in earnings ($3.96 versus $2.51).
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 59.87%. 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, VZ's net profit margin of 12.17% compares favorably to the industry average.

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