What To Buy: Top 3 Buy-Rated Dividend Stocks: IP, BX, TOT
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." International PaperDividend Yield: 4.20%International Paper (NYSE: IP) shares currently have a dividend yield of 4.20%. International Paper Company operates as a paper and packaging company in North America, Europe, Latin America, Russia, Asia, Africa, and the Middle East. The company operates through three segments: Industrial Packaging, Printing Papers, and Consumer Packaging. The company has a P/E ratio of 18.10. The average volume for International Paper has been 3,952,400 shares per day over the past 30 days. International Paper has a market cap of $17.3 billion and is part of the consumer non-durables industry. Shares are up 10.8% year-to-date as of the close of trading on Wednesday. EXCLUSIVE OFFER: See inside Jim Cramer's multi-million dollar charitable trust portfolio to see the stocks he thinks could be potential winners. Click here to see his holdings for 14-days FREE. TheStreet Ratings rates International Paper 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, attractive valuation levels and notable return on equity. 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:
- INTL PAPER CO has improved earnings per share by 10.8% 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. We feel that this trend should continue. During the past fiscal year, INTL PAPER CO increased its bottom line by earning $2.24 versus $1.33 in the prior year. This year, the market expects an improvement in earnings ($3.46 versus $2.24).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Containers & Packaging industry average. The net income increased by 6.7% when compared to the same quarter one year prior, going from $313.00 million to $334.00 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to other companies in the Containers & Packaging industry and the overall market on the basis of return on equity, INTL PAPER CO has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 8.3%. Since the same quarter one year prior, revenues slightly dropped by 7.4%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- You can view the full International Paper Ratings Report.
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Dividend Yield: 4.10%
(NYSE:
) shares currently have a dividend yield of 4.10%. The Blackstone Group L.P. is a publicly owned investment manager. The firm also provides financial advisory services to its clients. It provides its services to public and corporate pension funds, academic, cultural, and charitable organizations. The company has a P/E ratio of 16.00. The average volume for Blackstone Group has been 4,726,900 shares per day over the past 30 days. Blackstone Group has a market cap of $32.2 billion and is part of the financial services industry. Shares are down 9.1% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Blackstone Group
as a
. Among the primary strengths of the company is its expanding profit margins over time. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself. Highlights from the ratings report include:
- 37.75% is the gross profit margin for BLACKSTONE GROUP LP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, BX's net profit margin of 16.09% compares favorably to the industry average.
- BLACKSTONE GROUP LP 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, BLACKSTONE GROUP LP reported lower earnings of $1.04 versus $2.59 in the prior year. This year, the market expects an improvement in earnings ($2.50 versus $1.04).
- BX, with its very weak revenue results, has greatly underperformed against the industry average of 23.1%. Since the same quarter one year prior, revenues plummeted by 62.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 32.10%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 77.00% compared to the year-earlier quarter. Despite the heavy 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 when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 76.2% when compared to the same quarter one year ago, falling from $629.45 million to $150.03 million.
- You can view the full Blackstone Group Ratings Report.
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Dividend Yield: 5.60%
(NYSE:
) shares currently have a dividend yield of 5.60%. TOTAL S.A. operates as an integrated oil and gas company worldwide. The company operates through three segments: Upstream, Refining & Chemicals, and Marketing & Services. The average volume for Total has been 2,928,100 shares per day over the past 30 days. Total has a market cap of $115.2 billion and is part of the energy industry. Shares are up 7.9% year-to-date as of the close of trading on Wednesday.
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TheStreet Ratings rates
Total
as a
. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, notable return on equity and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company shows weak operating cash flow. Highlights from the ratings report include:
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, TOTAL SA's return on equity has significantly outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- TOTAL SA's earnings per share declined by 42.2% 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, TOTAL SA increased its bottom line by earning $2.19 versus $1.87 in the prior year. This year, the market expects an improvement in earnings ($2.83 versus $2.19).
- Despite the weak revenue results, TOT has significantly outperformed against the industry average of 57.2%. Since the same quarter one year prior, revenues fell by 25.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- Despite currently having a low debt-to-equity ratio of 0.56, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.75 is weak.
- You can view the full Total Ratings Report.
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Other helpful dividend tools from TheStreet:
- Our dividend calendar.
