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."

Enterprise Products Partners

Dividend Yield: 4.70%

Enterprise Products Partners (NYSE: EPD) shares currently have a dividend yield of 4.70%.

Enterprise Products Partners L.P. provides midstream energy services to producers and consumers of natural gas, natural gas liquids (NGLs), crude oil, refined products, and petrochemicals in the United States and internationally. The company has a P/E ratio of 20.83. Currently there are 16 analysts that rate Enterprise Products Partners a buy, no analysts rate it a sell, and 1 rates it a hold.

The average volume for Enterprise Products Partners has been 1,436,100 shares per day over the past 30 days. Enterprise Products Partners has a market cap of $50.7 billion and is part of the energy industry. Shares are up 12.6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Enterprise Products Partners as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance and good cash flow from operations. 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 where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. 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.
  • ENTERPRISE PRODS PRTNRS -LP's earnings per share declined by 17.1% 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, ENTERPRISE PRODS PRTNRS -LP increased its bottom line by earning $2.71 versus $2.37 in the prior year. This year, the market expects an improvement in earnings ($2.72 versus $2.71).
  • Net operating cash flow has increased to $1,275.10 million or 15.67% when compared to the same quarter last year. Despite an increase in cash flow, ENTERPRISE PRODS PRTNRS -LP's cash flow growth rate is still lower than the industry average growth rate of 28.97%.
  • EPD, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 4.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for ENTERPRISE PRODS PRTNRS -LP is currently extremely low, coming in at 7.60%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 5.58% trails that of the industry average.

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ONEOK Partners L.P

Dividend Yield: 5.40%

ONEOK Partners L.P (NYSE: OKS) shares currently have a dividend yield of 5.40%.

ONEOK Partners, L.P. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in three segments: Natural Gas Gathering and Processing, Natural Gas Pipelines, and Natural Gas Liquids. The company has a P/E ratio of 17.22. Currently there are 3 analysts that rate ONEOK Partners L.P a buy, 1 analyst rates it a sell, and 9 rate it a hold.

The average volume for ONEOK Partners L.P has been 494,800 shares per day over the past 30 days. ONEOK Partners L.P has a market cap of $7.7 billion and is part of the energy industry. Shares are down 3.4% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates ONEOK Partners L.P as a buy. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • OKS, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 7.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of ONEOK PARTNERS -LP has not done very well: it is down 6.07% 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ONEOK PARTNERS -LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The gross profit margin for ONEOK PARTNERS -LP is currently extremely low, coming in at 9.50%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 7.21% trails that of the industry average.

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.

Atlas Pipeline Partners

Dividend Yield: 7.10%

Atlas Pipeline Partners (NYSE: APL) shares currently have a dividend yield of 7.10%.

Atlas Pipeline Partners, L.P. operates in the gathering and processing segments of the midstream natural gas industry. The company operates in two segments, Gathering and Processing; and Transportation, Treating, and Other. The company has a P/E ratio of 34.33. Currently there are 5 analysts that rate Atlas Pipeline Partners a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Atlas Pipeline Partners has been 429,100 shares per day over the past 30 days. Atlas Pipeline Partners has a market cap of $2.1 billion and is part of the energy industry. Shares are up 3.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Atlas Pipeline Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • APL's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 3.5%. 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 121.14% to $49.12 million when compared to the same quarter last year. In addition, ATLAS PIPELINE PARTNER LP has also vastly surpassed the industry average cash flow growth rate of 28.97%.
  • APL's debt-to-equity ratio of 0.77 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.73 is weak.
  • ATLAS PIPELINE PARTNER LP's earnings per share declined by 46.7% 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 year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, ATLAS PIPELINE PARTNER LP reported lower earnings of $0.97 versus $5.22 in the prior year. This year, the market expects an improvement in earnings ($1.92 versus $0.97).
  • The gross profit margin for ATLAS PIPELINE PARTNER LP is currently extremely low, coming in at 13.90%. Regardless of APL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, APL's net profit margin of -2.48% significantly underperformed when compared to the industry average.

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.

Two Harbors Investment

Dividend Yield: 15.90%

Two Harbors Investment (NYSE: TWO) shares currently have a dividend yield of 15.90%.

Two Harbors Investment Corp. operates as a real estate investment trust (REIT) that focuses on investing in, financing, and managing residential mortgage-backed securities (RMBS), residential mortgage loans, residential real properties, and other financial assets. The company has a P/E ratio of 11.75. Currently there are 7 analysts that rate Two Harbors Investment a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Two Harbors Investment has been 5,366,000 shares per day over the past 30 days. Two Harbors Investment has a market cap of $4.1 billion and is part of the real estate industry. Shares are up 21.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Two Harbors Investment 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, compelling growth in net income 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:
  • TWO's very impressive revenue growth greatly exceeded the industry average of 16.4%. Since the same quarter one year prior, revenues leaped by 255.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 64.86% and other important driving factors, this stock has surged by 32.26% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, TWO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 268.1% when compared to the same quarter one year prior, rising from $51.43 million to $189.30 million.
  • The gross profit margin for TWO HARBORS INVESTMENT CORP is currently very high, coming in at 92.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 86.71% significantly outperformed against the industry average.
  • TWO HARBORS INVESTMENT CORP 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, TWO HARBORS INVESTMENT CORP reported lower earnings of $1.11 versus $1.27 in the prior year. This year, the market expects an improvement in earnings ($1.25 versus $1.11).

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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