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."

Martin Midstream Partners L.P

Dividend Yield: 8.50%

Martin Midstream Partners L.P (NASDAQ: MMLP) shares currently have a dividend yield of 8.50%.

Martin Midstream Partners L.P. collects, transports, stores, and markets petroleum products and by-products in the United States Gulf Coast region. The company has a P/E ratio of 27.57. Currently there is 1 analyst that rates Martin Midstream Partners L.P a buy, no analysts rate it a sell, and 6 rate it a hold.

The average volume for Martin Midstream Partners L.P has been 128,400 shares per day over the past 30 days. Martin Midstream Partners L.P has a market cap of $968.9 million and is part of the energy industry. Shares are up 19.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates Martin Midstream 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, good cash flow from operations and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • MMLP's very impressive revenue growth greatly exceeded the industry average of 2.9%. Since the same quarter one year prior, revenues leaped by 65.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • MARTIN MIDSTREAM 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, MARTIN MIDSTREAM PARTNERS LP increased its bottom line by earning $1.33 versus $0.61 in the prior year. This year, the market expects an improvement in earnings ($1.67 versus $1.33).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 316.2% when compared to the same quarter one year prior, rising from $2.85 million to $11.87 million.
  • Net operating cash flow has significantly increased by 74.54% to $50.68 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 29.14%.
  • 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, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.

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.

Educational Development Corporation

Dividend Yield: 8.30%

Educational Development Corporation (NASDAQ: EDUC) shares currently have a dividend yield of 8.30%.

Educational Development Corporation operates as a trade publisher of the line of children's books in the United States. The company has a P/E ratio of 12.02.

The average volume for Educational Development Corporation has been 7,000 shares per day over the past 30 days. Educational Development Corporation has a market cap of $15.3 million and is part of the media industry. Shares are up 1% year to date as of the close of trading on Friday.

TheStreet Ratings rates Educational Development Corporation as a buy. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, expanding profit margins, largely solid financial position with reasonable debt levels by most measures 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 gross profit margin for EDUCATIONAL DEVELOPMENT CORP is rather high; currently it is at 61.20%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 6.68% is above that of the industry average.
  • EDUC's debt-to-equity ratio is very low at 0.04 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.99 is somewhat weak and could be cause for future problems.
  • EDUCATIONAL DEVELOPMENT CORP's earnings per share declined by 31.6% in the most recent quarter compared to the same quarter a year ago. This company has not demonstrated a clear trend in earnings over the past 2 years, making it difficult to accurately predict earnings for the coming year. During the past fiscal year, EDUCATIONAL DEVELOPMENT CORP increased its bottom line by earning $0.36 versus $0.30 in the prior year.
  • EDUC, with its decline in revenue, slightly underperformed the industry average of 0.5%. Since the same quarter one year prior, revenues slightly dropped by 9.5%. The declining revenue appears to have seeped down to the company's bottom line, decreasing 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.

Compass Diversified Holdings Shares of Bene

Dividend Yield: 9.20%

Compass Diversified Holdings Shares of Bene (NYSE: CODI) shares currently have a dividend yield of 9.20%.

Compass Diversified Holdings is a public investment firm specializing in acquiring controlling stakes in small to middle market companies. The firm seeks to make middle market and buyout investments. Currently there are 3 analysts that rate Compass Diversified Holdings Shares of Bene a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Compass Diversified Holdings Shares of Bene has been 162,000 shares per day over the past 30 days. Compass Diversified Holdings Shares of Bene has a market cap of $755.9 million and is part of the diversified services industry. Shares are up 5.6% year to date as of the close of trading on Friday.

TheStreet Ratings rates Compass Diversified Holdings Shares of Bene as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, impressive record of earnings per share 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 6.8%. Since the same quarter one year prior, revenues rose by 36.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.65, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
  • COMPASS DIVERSIFIED HOLDINGS 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, COMPASS DIVERSIFIED HOLDINGS continued to lose money by earning -$0.05 versus -$0.81 in the prior year. This year, the market expects an improvement in earnings ($1.66 versus -$0.05).
  • In its most recent trading session, CODI 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Diversified Financial Services industry and the overall market, COMPASS DIVERSIFIED HOLDINGS's return on equity significantly trails that of both the industry average and the S&P 500.

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.

Mind C.T.I

Dividend Yield: 12.30%

Mind C.T.I (NASDAQ: MNDO) shares currently have a dividend yield of 12.30%.

Mind C.T.I. Ltd. develops, manufactures, and markets real-time and off-line billing and customer care software for communication providers worldwide. The company has a P/E ratio of 8.48.

The average volume for Mind C.T.I has been 40,300 shares per day over the past 30 days. Mind C.T.I has a market cap of $36.6 million and is part of the computer software & services industry. Shares are down 4.3% year to date as of the close of trading on Friday.

TheStreet Ratings rates Mind C.T.I 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, attractive valuation levels, expanding profit margins and increase in stock price during the past year. 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 Software industry average. The net income increased by 7.9% when compared to the same quarter one year prior, going from $1.27 million to $1.37 million.
  • MNDO 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 5.64, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for MIND CTI LTD is currently very high, coming in at 71.00%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 27.69% is above that of the industry average.
  • MNDO, with its decline in revenue, slightly underperformed the industry average of 1.4%. Since the same quarter one year prior, revenues slightly dropped by 6.1%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable 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.

Ituran Location and Control

Dividend Yield: 8.40%

Ituran Location and Control (NASDAQ: ITRN) shares currently have a dividend yield of 8.40%.

Ituran Location and Control Ltd., together with its subsidiaries, provides location-based services and wireless communication products in Israel, Brazil, Argentina, and the United States. The company has a P/E ratio of 16.72. Currently there are no analysts that rate Ituran Location and Control a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for Ituran Location and Control has been 23,800 shares per day over the past 30 days. Ituran Location and Control has a market cap of $369.0 million and is part of the telecommunications industry. Shares are up 15.7% year to date as of the close of trading on Friday.

TheStreet Ratings rates Ituran Location and Control as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. 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.
  • ITURAN LOCATION & CONTROL 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. During the past fiscal year, ITURAN LOCATION & CONTROL increased its bottom line by earning $1.18 versus $1.01 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Communications Equipment industry. The net income increased by 178.4% when compared to the same quarter one year prior, rising from $1.58 million to $4.41 million.
  • ITRN's revenue growth trails the industry average of 14.2%. Since the same quarter one year prior, revenues slightly increased by 3.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • ITRN's debt-to-equity ratio is very low at 0.00 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.34, which illustrates the ability to avoid short-term cash problems.

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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