3 Buy-Rated Dividend Stocks To Check Out: RDS.B, MWE, CVA - TheStreet

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 or Stephanie Link.

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."

Royal Dutch Shell

Dividend Yield: 5.00%

Royal Dutch Shell

(NYSE:

RDS.B

) shares currently have a dividend yield of 5.00%.

Royal Dutch Shell plc operates as an independent oil and gas company worldwide. The company explores for and extracts crude oil, natural gas, and natural gas liquids. The company has a P/E ratio of 9.53.

The average volume for Royal Dutch Shell has been 742,900 shares per day over the past 30 days. Royal Dutch Shell has a market cap of $239.6 billion and is part of the energy industry. Shares are down 0.4% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates

Royal Dutch Shell

as a

buy

. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, increase in stock price during the past year and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Net operating cash flow has increased to $12,811.00 million or 23.07% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -1.84%.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • RDS.B's debt-to-equity ratio is very low at 0.24 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.88 is somewhat weak and could be cause for future problems.
  • ROYAL DUTCH SHELL PLC's earnings per share declined by 6.7% 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 two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ROYAL DUTCH SHELL PLC reported lower earnings of $5.18 versus $8.52 in the prior year. This year, the market expects an improvement in earnings ($12.84 versus $5.18).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

MarkWest Energy Partners

Dividend Yield: 4.70%

MarkWest Energy Partners

(NYSE:

MWE

) shares currently have a dividend yield of 4.70%.

MarkWest Energy Partners, L.P. is engaged in the gathering, processing, and transportation of natural gas. The company is also engaged in the gathering, transportation, fractionation, storage, and marketing of natural gas liquids; and the gathering and transportation of crude oil. The company has a P/E ratio of 153.65.

The average volume for MarkWest Energy Partners has been 1,249,500 shares per day over the past 30 days. MarkWest Energy Partners has a market cap of $13.9 billion and is part of the energy industry. Shares are up 11.1% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

MarkWest Energy Partners

as a

buy

. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins, largely solid financial position with reasonable debt levels by most measures and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:

  • The revenue growth greatly exceeded the industry average of 6.5%. Since the same quarter one year prior, revenues rose by 44.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 47.63% is the gross profit margin for MARKWEST ENERGY PARTNERS LP which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 12.75% is above that of the industry average.
  • 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 428.1% when compared to the same quarter one year prior, rising from -$23.60 million to $77.43 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.74, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that MWE's debt-to-equity ratio is low, the quick ratio, which is currently 0.57, displays a potential problem in covering short-term cash needs.
  • MARKWEST ENERGY PARTNERS LP reported significant earnings per share improvement 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, MARKWEST ENERGY PARTNERS LP reported lower earnings of $0.21 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($0.90 versus $0.21).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Covanta

Dividend Yield: 4.10%

Covanta

(NYSE:

CVA

) shares currently have a dividend yield of 4.10%.

Covanta Holding Corporation, through its subsidiaries, provides waste and energy services to municipal entities primarily in North America. The company has a P/E ratio of 127.00.

The average volume for Covanta has been 1,551,500 shares per day over the past 30 days. Covanta has a market cap of $3.2 billion and is part of the materials & construction industry. Shares are up 38.1% year-to-date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreet Ratings rates

Covanta

as a

buy

. The company's strengths can be seen in multiple areas, such as its solid stock price performance, expanding profit margins and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:

  • Compared to its closing price of one year ago, CVA's share price has jumped by 35.56%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • 35.51% is the gross profit margin for COVANTA HOLDING CORP which we consider to be strong. Regardless of CVA's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.44% trails the industry average.
  • COVANTA HOLDING CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, COVANTA HOLDING CORP reported lower earnings of $0.35 versus $0.87 in the prior year. This year, the market expects an improvement in earnings ($0.45 versus $0.35).
  • CVA, with its decline in revenue, underperformed when compared the industry average of 8.3%. Since the same quarter one year prior, revenues slightly dropped by 2.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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