Best 3 Yielding Buy-Rated Stocks: BGS, NGLS, ARCC
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."
Dividend Yield: 4.90%
(NYSE:
) shares currently have a dividend yield of 4.90%.
B&G Foods, Inc. manufactures, sells, and distributes shelf-stable food and household products in the United States, Canada, and Puerto Rico. The company has a P/E ratio of 36.80.
The average volume for B&G Foods has been 370,100 shares per day over the past 30 days. B&G Foods has a market cap of $1.5 billion and is part of the food & beverage industry. Shares are down 6.9% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
B&G Foods
as a
. Among the primary strengths of the company is its revenue growth. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 10.0%. Since the same quarter one year prior, revenues rose by 14.4%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- B&G FOODS INC's earnings per share declined by 40.0% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, B&G FOODS INC reported lower earnings of $0.76 versus $0.98 in the prior year. This year, the market expects an improvement in earnings ($1.50 versus $0.76).
- Net operating cash flow has decreased to $38.44 million or 16.47% when compared to the same quarter last year. Despite a decrease in cash flow B&G FOODS INC is still fairing well by exceeding its industry average cash flow growth rate of -37.39%.
- In its most recent trading session, BGS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Food Products industry. The net income has significantly decreased by 39.0% when compared to the same quarter one year ago, falling from $18.79 million to $11.45 million.
- You can view the full B&G Foods Ratings Report.
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Dividend Yield: 8.50%
(NYSE:
) shares currently have a dividend yield of 8.50%.
Targa Resources Partners LP owns, operates, acquires, and develops midstream energy assets in the United States. The company has a P/E ratio of 13.80.
The average volume for Targa Resources Partners has been 899,300 shares per day over the past 30 days. Targa Resources Partners has a market cap of $4.5 billion and is part of the energy industry. Shares are down 19% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Targa Resources Partners
as a
. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and notable return on equity. We feel these 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 97.40% to $266.70 million when compared to the same quarter last year. In addition, TARGA RESOURCES PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -11.94%.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TARGA RESOURCES PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
- Despite the weak revenue results, NGLS has outperformed against the industry average of 19.6%. Since the same quarter one year prior, revenues slightly dropped by 3.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 0.5% when compared to the same quarter one year ago, dropping from $108.60 million to $108.10 million.
- You can view the full Targa Resources Partners Ratings Report.
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Dividend Yield: 9.00%
(NASDAQ:
) shares currently have a dividend yield of 9.00%.
Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. The company has a P/E ratio of 8.80.
The average volume for Ares Capital Corporation has been 2,271,900 shares per day over the past 30 days. Ares Capital Corporation has a market cap of $5.3 billion and is part of the financial services industry. Shares are up 8.6% year-to-date as of the close of trading on Tuesday.
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TheStreet Ratings rates
Ares Capital Corporation
as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, expanding profit margins and growth in earnings per share. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 13.0%. Since the same quarter one year prior, revenues rose by 15.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 14.6% when compared to the same quarter one year prior, going from $133.88 million to $153.39 million.
- Net operating cash flow has significantly increased by 83.93% to -$30.82 million when compared to the same quarter last year. In addition, ARES CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of 3.62%.
- The gross profit margin for ARES CAPITAL CORP is rather high; currently it is at 69.02%. Regardless of ARCC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARCC's net profit margin of 56.61% significantly outperformed against the industry.
- ARES CAPITAL CORP'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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ARES CAPITAL CORP increased its bottom line by earning $1.93 versus $1.81 in the prior year. For the next year, the market is expecting a contraction of 16.3% in earnings ($1.62 versus $1.93).
- You can view the full Ares Capital Corporation Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
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