High-Yield Stocks With Analyst Blessings

BOSTON (TheStreet) -- The stock market has rallied in 2010, but complacency could limit growth. Dividend-paying stocks currently offer a margin of safety. Here are three high-yield stocks that garner "buy" ratings from the majority of analysts who cover them.

3. Copano Energy

( CPNO) provides midstream services to natural gas producers, including processing, compression and transportation. Its stock yields 9.1% with a payout ratio of 633%. The board has increased distributions, which are taxed differently than dividends, each year since 2005.

Quarter

: Fourth-quarter net income decreased 36% to $7.5 million and earnings per share fell 48% to 11 cents. Revenue inched up 1%. The operating margin remained steady at 9%. Copano holds $45 million of cash and $853 million of debt, translating to a quick ratio of 1 and a debt-to-equity ratio of 1.

Stock

: Copano has advanced 81% during the past year, outperforming U.S. indices. It trades at a price-to-book ratio of 1.7 and a price-to-sales ratio of 1.8, 99% and 35% discounts to industry averages. Its PEG ratio, a measure of value relative to expected growth, of 0.7 signifies a bargain to buy-and-hold investors.

Consensus

: Of analysts following Copano, five, or 56%, advise purchasing its shares and four recommend holding them.

Ladenburg Thalman

(LTS) - Get Report

expects the stock to advance 14% to $29, the loftiest price target.

RBC

(RY) - Get Report

predicts the stock will hit $26 and

UBS

(UBS) - Get Report

says it will climb to $25.50.

Holders

: Five of Copano's 10-largest holders, including

Bank of America

(BAC) - Get Report

and UBS, increased their holdings during the fourth quarter. Three, including

Fidelity Management

, reduced their holdings and three positions remained the same.

2. Linn Energy

(LINE)

is an independent oil and gas company that acquires and develops properties in the United States, primarily in Texas and California. Its stock yields 9.7%. The company has suffered losses in three of the past four quarters.

Quarter

: Linn swung to a fourth-quarter loss of $65 million, or 52 cents, from a profit of $889 million, or $7.76, a year earlier. Revenue plummeted 92%. The operating margin fell from 85% into negative territory. Linn has $22 million of cash and $1.6 billion of debt, converting to a debt-to-equity ratio of 0.6.

Stock

: Linn has soared 77% during the past year, outpacing U.S. indices. The stock sells for a price-to-book ratio of 1.4 and a price-to-cash-flow ratio of 8, 99% and 18% discounts to industry averages. It's expensive based on projected earnings and sales. It has dropped 9% a year since 2007.

Consensus

: Of analysts covering Linn, five, or 83%, rate its stock "buy" and one rates it "hold."

Raymond James

(RJF) - Get Report

and

Barclays

(BCS) - Get Report

project a share price of $30, a potential 15% gain.

Citigroup

(C) - Get Report

predicts the stock will hit $28.50.

Wells Fargo

(WFC) - Get Report

rates Linn Energy "market perform."

Holders

: Five of Linn's 10-largest shareholders, including

Morgan Stanley

(MS) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

, increased their positions during the fourth quarter. Four lessened their holdings and one maintained the size of its position. Linn has fallen 4.4% during the past month, trailing major benchmarks.

1. Chimera Investment

(CIM) - Get Report

is a real estate investment trust, or REIT, that invests in residential mortgage-backed securities and asset-backed securities. Its stock yields 17.4% with a payout ratio of 99%. REIT distributions are taxed differently than dividends.

Quarter

: Fourth-quarter profit rose tenfold to $95 million, or 14 cents, as revenue quadrupled to $101 million. Chimera's gross and operating margins extended from 83% to 89%. Its balance sheet stores $45 million of cash and $2.4 billion of debt, translating to a debt-to-equity ratio of 1.1.

Stock

: Chimera has risen 25% during the past year, underperforming indices. The stock trades at a price-to-earnings ratio of 6.6, a price-to-projected-earnings ratio of 6.1 and a price-to-book ratio of 1.2, 95%, 91% and 42% discounts to industry averages. It's expensive based on sales and cash flow.

Consensus

: Of firms rating Chimera, five, or 63%, recommend buying its shares and three advise holding them.

Sterne, Agee & Leach

believes the stock will appreciate 34% to $5.25.

Deutsche Bank

(DB) - Get Report

thinks it will hit $5 and

Keefe, Bruyette & Woods

(KBW)

expects it will rise to $4.

Holders

: Seven of Chimera's 10-largest shareholders, including

BlackRock

(BLK) - Get Report

and

Vanguard

, purchased additional shares during the fourth quarter. Three sold a portion of their holdings. Chimera has fallen 2.2% during the past four weeks, lagging behind major benchmarks on fears of interest rate increases.

-- Reported by Jake Lynch in Boston.