5 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 5 stocks with substantial yields, that ultimately, we have rated "Buy."

Great Northern Iron Ore

Dividend Yield: 11.30%

Great Northern Iron Ore (NYSE: GNI) shares currently have a dividend yield of 11.30%.

Great Northern Iron Ore Properties, a conventional nonvoting trust, owns and leases mineral and non-mineral properties on the Mesabi Iron Range in northeastern Minnesota. The company has a P/E ratio of 5.94.

The average volume for Great Northern Iron Ore has been 22,800 shares per day over the past 30 days. Great Northern Iron Ore has a market cap of $119.3 million and is part of the metals & mining industry. Shares are up 19.7% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Great Northern Iron Ore as a buy.

Highlights from the ratings report include:
  • The revenue fell significantly faster than the industry average of 6.5%. Since the same quarter one year prior, revenues fell by 44.4%. 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 exceeded that of the Metals & Mining industry average, but is less than that of the S&P 500. The net income has significantly decreased by 51.0% when compared to the same quarter one year ago, falling from $7.24 million to $3.55 million.
  • The share price of GREAT NORTHERN IRON ORE PPTY has not done very well: it is down 19.73% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • GREAT NORTHERN IRON ORE PPTY 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, GREAT NORTHERN IRON ORE PPTY reported lower earnings of $13.38 versus $15.37 in the prior year.

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BlackRock Kelso Capital Corporation

Dividend Yield: 10.20%

BlackRock Kelso Capital Corporation (NASDAQ: BKCC) shares currently have a dividend yield of 10.20%.

BlackRock Kelso Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm invests in all industries. The company has a P/E ratio of 13.09. Currently there is 1 analyst that rates BlackRock Kelso Capital Corporation a buy, 1 analyst rates it a sell, and 3 rate it a hold.

The average volume for BlackRock Kelso Capital Corporation has been 654,600 shares per day over the past 30 days. BlackRock Kelso Capital Corporation has a market cap of $755.1 million and is part of the financial services industry. Shares are down 0.7% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates BlackRock Kelso Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.8%. Since the same quarter one year prior, revenues slightly increased by 5.3%. 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.
  • Net operating cash flow has significantly increased by 304.29% to $61.76 million when compared to the same quarter last year. In addition, BLACKROCK KELSO CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -72.06%.
  • 36.00% is the gross profit margin for BLACKROCK KELSO CAPITAL CORP 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, BKCC's net profit margin of 4.59% is significantly lower than the industry average.
  • BLACKROCK KELSO CAPITAL CORP 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. 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, BLACKROCK KELSO CAPITAL CORP reported lower earnings of $0.78 versus $1.06 in the prior year. This year, the market expects an improvement in earnings ($0.96 versus $0.78).
  • In its most recent trading session, BKCC 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. 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.

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.

AllianceBernstein Holding L.P

Dividend Yield: 7.40%

AllianceBernstein Holding L.P (NYSE: AB) shares currently have a dividend yield of 7.40%.

AllianceBernstein Holding L.P. provides investment management and related services in the United States and internationally. The company has a P/E ratio of 42.47. Currently there are 3 analysts that rate AllianceBernstein Holding L.P a buy, 1 analyst rates it a sell, and 2 rate it a hold.

The average volume for AllianceBernstein Holding L.P has been 416,100 shares per day over the past 30 days. AllianceBernstein Holding L.P has a market cap of $2.3 billion and is part of the financial services industry. Shares are up 24% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates AllianceBernstein Holding L.P as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, compelling growth in net income, good cash flow from operations and expanding profit margins. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • AB's very impressive revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues leaped by 113.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ALLIANCEBERNSTEIN HOLDING LP 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 year. We feel that this trend should continue. During the past fiscal year, ALLIANCEBERNSTEIN HOLDING LP turned its bottom line around by earning $0.50 versus -$0.95 in the prior year. This year, the market expects an improvement in earnings ($1.51 versus $0.50).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 113.1% when compared to the same quarter one year prior, rising from -$199.46 million to $26.19 million.
  • Net operating cash flow has significantly increased by 51.57% to $37.86 million when compared to the same quarter last year. In addition, ALLIANCEBERNSTEIN HOLDING LP has also vastly surpassed the industry average cash flow growth rate of -72.06%.
  • The gross profit margin for ALLIANCEBERNSTEIN HOLDING LP is currently very high, coming in at 100.00%. AB has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, AB's net profit margin of 97.38% significantly outperformed against the industry.

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.

THL Credit

Dividend Yield: 8.60%

THL Credit (NASDAQ: TCRD) shares currently have a dividend yield of 8.60%.

THL Credit, Inc. is a private equity and mezzanine firm specializing in mature, bridge, PIPES, industry consolidation, acquisition, recapitalization, change of control transactions, and growth capital investments in both sponsored and unsponsored middle-market companies. The company has a P/E ratio of 11.12. Currently there are 4 analysts that rate THL Credit a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for THL Credit has been 201,600 shares per day over the past 30 days. THL Credit has a market cap of $403.7 million and is part of the financial services industry. Shares are up 1.9% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates THL Credit as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • TCRD's very impressive revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues leaped by 50.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The stock has not only risen over the past year, it has done so at a faster pace than the S&P 500, reflecting the earnings growth and other positive factors similar to those we have cited here. 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.
  • THL CREDIT INC has improved earnings per share by 8.6% 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, THL CREDIT INC increased its bottom line by earning $1.26 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($1.41 versus $1.26).
  • The gross profit margin for THL CREDIT INC is rather high; currently it is at 65.80%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 59.68% significantly outperformed against the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Capital Markets industry average, but is greater than that of the S&P 500. The net income increased by 38.1% when compared to the same quarter one year prior, rising from $7.08 million to $9.78 million.

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.

Vector Group

Dividend Yield: 10.20%

Vector Group (NYSE: VGR) shares currently have a dividend yield of 10.20%.

Vector Group Ltd., through its subsidiaries, engages in the manufacture and sale of cigarettes in the United States. The company has a P/E ratio of 44.60. Currently there are no analysts that rate Vector Group a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Vector Group has been 514,800 shares per day over the past 30 days. Vector Group has a market cap of $1.4 billion and is part of the tobacco industry. Shares are up 5.6% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Vector Group as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, good cash flow from operations, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • VECTOR GROUP LTD has improved earnings per share by 5.0% 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. During the past fiscal year, VECTOR GROUP LTD increased its bottom line by earning $0.82 versus $0.56 in the prior year.
  • Net operating cash flow has increased to $39.42 million or 43.70% when compared to the same quarter last year. In addition, VECTOR GROUP LTD has also vastly surpassed the industry average cash flow growth rate of -71.76%.
  • 49.00% is the gross profit margin for VECTOR GROUP LTD which we consider to be strong. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, VGR's net profit margin of 12.24% significantly trails the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Tobacco industry average. The net income increased by 2.2% when compared to the same quarter one year prior, going from $17.55 million to $17.93 million.
  • VGR, with its decline in revenue, slightly underperformed the industry average of 0.7%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. 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.

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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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