4 Buy-Rated Dividend Stocks

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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 and 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 4 stocks with substantial yields, that ultimately, we have rated "Buy."

Copano Energy

Dividend Yield: 6.10%

Copano Energy (NASDAQ: CPNO) shares currently have a dividend yield of 6.10%.

Copano Energy, L.L.C. provides midstream services to natural gas producers in the United States. It operates in three segments: Texas, Oklahoma, and Rocky Mountains. Currently there are no analysts that rate Copano Energy a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for Copano Energy has been 761,300 shares per day over the past 30 days. Copano Energy has a market cap of $3.0 billion and is part of the energy industry. Shares are up 20% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Copano Energy as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 3.0%. Since the same quarter one year prior, revenues rose by 11.6%. 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.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • COPANO ENERGY LLC has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, COPANO ENERGY LLC continued to lose money by earning -$2.49 versus -$2.86 in the prior year. This year, the market expects an improvement in earnings ($1.05 versus -$2.49).
  • 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. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, COPANO ENERGY LLC's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for COPANO ENERGY LLC is currently extremely low, coming in at 9.80%. Regardless of CPNO's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, CPNO's net profit margin of -10.41% significantly underperformed when compared to the industry average.

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UIL Holdings Corporation

Dividend Yield: 4.50%

UIL Holdings Corporation (NYSE: UIL) shares currently have a dividend yield of 4.50%.

UIL Holdings Corporation, through its subsidiaries, operates in the regulated utility businesses. It is involved in the purchase, transmission, distribution, and sale of electricity for residential, commercial, and industrial purposes in the southwestern part of the State of Connecticut. The company has a P/E ratio of 19.12. Currently there are 3 analysts that rate UIL Holdings Corporation a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for UIL Holdings Corporation has been 267,400 shares per day over the past 30 days. UIL Holdings Corporation has a market cap of $2.0 billion and is part of the utilities industry. Shares are up 8% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates UIL Holdings Corporation as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, increase in net income, revenue growth and good cash flow from operations. 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:
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • UIL HOLDINGS CORP has improved earnings per share by 36.6% 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, UIL HOLDINGS CORP increased its bottom line by earning $2.02 versus $1.95 in the prior year. This year, the market expects an improvement in earnings ($2.22 versus $2.02).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 35.5% when compared to the same quarter one year prior, rising from $21.29 million to $28.84 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 14.9%. Since the same quarter one year prior, revenues rose by 12.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Net operating cash flow has significantly increased by 130.55% to $86.01 million when compared to the same quarter last year. In addition, UIL HOLDINGS CORP has also vastly surpassed the industry average cash flow growth rate of 5.45%.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Companhia de Bebidas das Americas Ambev

Dividend Yield: 4.10%

Companhia de Bebidas das Americas Ambev (NYSE: ABV) shares currently have a dividend yield of 4.10%.

Companhia de Bebidas das Americas Ambev engages in the production, distribution, and sale of beer, draft beer, carbonated soft drinks, malt, and other non-alcoholic and non-carbonated products in the Americas. It also sells bottled water, isotonics, and ready-to-drink teas. The company has a P/E ratio of 103.62. Currently there are 2 analysts that rate Companhia de Bebidas das Americas Ambev a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Companhia de Bebidas das Americas Ambev has been 1,821,700 shares per day over the past 30 days. Companhia de Bebidas das Americas Ambev has a market cap of $134.6 billion and is part of the food & beverage industry. Shares are up 2.7% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Companhia de Bebidas das Americas Ambev as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, notable return on equity, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • ABV's revenue growth has slightly outpaced the industry average of 0.4%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COMPANHIA DE BEBIDAS DAS AME has improved earnings per share by 9.6% 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, COMPANHIA DE BEBIDAS DAS AME increased its bottom line by earning $1.64 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($1.81 versus $1.64).
  • 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. Compared to other companies in the Beverages industry and the overall market, COMPANHIA DE BEBIDAS DAS AME's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for COMPANHIA DE BEBIDAS DAS AME is rather high; currently it is at 69.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.84% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to $3,464.84 million or 8.83% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -2.23%.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

People's United Financial

Dividend Yield: 4.70%

People's United Financial (NASDAQ: PBCT) shares currently have a dividend yield of 4.70%.

People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers. The company has a P/E ratio of 18.78. Currently there is 1 analyst that rates People's United Financial a buy, 2 analysts rate it a sell, and 12 rate it a hold.

The average volume for People's United Financial has been 3,138,700 shares per day over the past 30 days. People's United Financial has a market cap of $4.6 billion and is part of the banking industry. Shares are up 11.4% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates People's United Financial as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, attractive valuation levels, expanding profit margins, good cash flow from operations and notable return on equity. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • PEOPLE'S UNITED FINL INC reported significant earnings per share improvement 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, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.72 versus $0.57 in the prior year. This year, the market expects an improvement in earnings ($0.80 versus $0.72).
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 88.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.19% is above that of the industry average.
  • Net operating cash flow has increased to $82.70 million or 43.57% when compared to the same quarter last year. Despite an increase in cash flow, PEOPLE'S UNITED FINL INC's cash flow growth rate is still lower than the industry average growth rate of 65.45%.
  • PBCT, with its decline in revenue, slightly underperformed the industry average of 4.4%. Since the same quarter one year prior, revenues slightly dropped by 2.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

New From TheStreet: Jim Cramer's Protégé, Dave Peltier, only buys dividend stocks that have the potential for a 3% to 4% yield and 10% growth. Get his best picks for less than $50/year.

Other helpful dividend tools from TheStreet:

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

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