3 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 3 stocks with substantial yields, that ultimately, we have rated "Buy."

Dorchester Minerals L.P

Dividend Yield: 7.50%

Dorchester Minerals L.P (NASDAQ: DMLP) shares currently have a dividend yield of 7.50%.

Dorchester Minerals, L.P. engages in the acquisition, ownership, and administration of producing and nonproducing natural gas and crude oil royalty, net profits, and leasehold interests in 574 counties and 25 states. The company has a P/E ratio of 19.38.

The average volume for Dorchester Minerals L.P has been 46,900 shares per day over the past 30 days. Dorchester Minerals L.P has a market cap of $713.2 million and is part of the financial services industry. Shares are up 14.4% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Dorchester Minerals L.P as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, largely solid financial position with reasonable debt levels by most measures, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry average. The net income increased by 5.4% when compared to the same quarter one year prior, going from $13.20 million to $13.92 million.
  • DMLP has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 53.53, which clearly demonstrates the ability to cover short-term cash needs.
  • 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, DORCHESTER MINERALS -LP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for DORCHESTER MINERALS -LP is currently very high, coming in at 94.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 68.81% significantly outperformed against the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 1.1%. 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.

Medley Capital

Dividend Yield: 9.10%

Medley Capital (NYSE: MCC) shares currently have a dividend yield of 9.10%.

Medley Capital Corporation is a business development company. The fund seeks to invest in privately negotiated debt and equity securities of small and middle market companies. The company has a P/E ratio of 11.44. Currently there are 7 analysts that rate Medley Capital a buy, 1 analyst rates it a sell, and 1 rates it a hold.

The average volume for Medley Capital has been 336,800 shares per day over the past 30 days. Medley Capital has a market cap of $455.7 million and is part of the financial services industry. Shares are up 8.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Medley Capital as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • MCC's very impressive revenue growth greatly exceeded the industry average of 9.8%. Since the same quarter one year prior, revenues leaped by 115.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 56.00% and other important driving factors, this stock has surged by 41.41% 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, MCC should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • MEDLEY CAPITAL CORP 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, MEDLEY CAPITAL CORP increased its bottom line by earning $1.24 versus $0.55 in the prior year. This year, the market expects an improvement in earnings ($1.48 versus $1.24).
  • 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 119.0% when compared to the same quarter one year prior, rising from $4.39 million to $9.61 million.
  • The gross profit margin for MEDLEY CAPITAL CORP is rather high; currently it is at 67.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 54.25% significantly outperformed against 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.

Exterran Partners L.P

Dividend Yield: 8.10%

Exterran Partners L.P (NASDAQ: EXLP) shares currently have a dividend yield of 8.10%.

Exterran Partners, L.P. provides natural gas contract operations services to customers in the United States. The company has a P/E ratio of 180.86. Currently there are 3 analysts that rate Exterran Partners L.P a buy, no analysts rate it a sell, and 3 rate it a hold.

The average volume for Exterran Partners L.P has been 188,600 shares per day over the past 30 days. Exterran Partners L.P has a market cap of $1.1 billion and is part of the energy industry. Shares are up 23.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Exterran Partners 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, expanding profit margins 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:
  • The revenue growth came in higher than the industry average of 7.8%. Since the same quarter one year prior, revenues rose by 22.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • EXTERRAN PARTNERS 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 two years. We feel that this trend should continue. During the past fiscal year, EXTERRAN PARTNERS LP increased its bottom line by earning $0.14 versus $0.07 in the prior year. This year, the market expects an improvement in earnings ($1.00 versus $0.14).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Energy Equipment & Services industry. The net income increased by 225.0% when compared to the same quarter one year prior, rising from $4.52 million to $14.67 million.
  • 43.90% is the gross profit margin for EXTERRAN PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 14.34% is above that of the industry average.
  • Net operating cash flow has significantly increased by 72.95% to $45.61 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 28.37%.

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.
null

If you liked this article you might like

3 Hold-Rated Dividend Stocks: CAPL, DMLP, NAP

3 Hold-Rated Dividend Stocks: CAPL, DMLP, NAP

Ex-Dividend Alert: 3 Stocks Going Ex-Dividend Tomorrow: DMLP, ENLK, MMP

Ex-Dividend Alert: 3 Stocks Going Ex-Dividend Tomorrow: DMLP, ENLK, MMP

What To Hold: 3 Hold-Rated Dividend Stocks DMLP, WSR, UMH

What To Hold: 3 Hold-Rated Dividend Stocks DMLP, WSR, UMH

3 Hold-Rated Dividend Stocks: NSH, DMLP, TGH

3 Hold-Rated Dividend Stocks: NSH, DMLP, TGH

3 Hold-Rated Dividend Stocks: DMLP, WHF, TLP

3 Hold-Rated Dividend Stocks: DMLP, WHF, TLP