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."

Suburban Propane Partners

Dividend Yield: 7.50%

Suburban Propane Partners (NYSE: SPH) shares currently have a dividend yield of 7.50%.

Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, fuel oil, and refined fuels. The company has a P/E ratio of 106.41.

The average volume for Suburban Propane Partners has been 200,300 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $2.7 billion and is part of the utilities industry. Shares are up 19.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Suburban Propane Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, good cash flow from operations, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • SPH's very impressive revenue growth greatly exceeded the industry average of 3.5%. Since the same quarter one year prior, revenues leaped by 63.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 157.3% when compared to the same quarter one year prior, rising from $23.23 million to $59.79 million.
  • Net operating cash flow has significantly increased by 343.00% to $61.54 million when compared to the same quarter last year. In addition, SUBURBAN PROPANE PRTNRS -LP has also vastly surpassed the industry average cash flow growth rate of 36.65%.
  • SUBURBAN PROPANE PRTNRS -LP 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, SUBURBAN PROPANE PRTNRS -LP reported lower earnings of $0.48 versus $3.22 in the prior year. This year, the market expects an improvement in earnings ($2.20 versus $0.48).
  • Even though the current debt-to-equity ratio is 1.28, it is still below the industry average, suggesting that this level of debt is acceptable within the Gas Utilities industry. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 1.07 is sturdy.

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Baytex Energy

Dividend Yield: 7.20%

Baytex Energy (NYSE: BTE) shares currently have a dividend yield of 7.20%.

Baytex Energy Corp., an oil and gas company, engages in the acquisition, development, and production of crude oil and natural gas in the Western Canadian Sedimentary Basin; and the Williston Basin in the United States. The company offers heavy oil, light oil, and natural gas liquids. The company has a P/E ratio of 16.73.

The average volume for Baytex Energy has been 181,800 shares per day over the past 30 days. Baytex Energy has a market cap of $4.4 billion and is part of the energy industry. Shares are down 15.6% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Baytex Energy as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, good cash flow from operations, expanding profit margins and largely solid financial position with reasonable debt levels by most measures. 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 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 on the basis of return on equity, BAYTEX ENERGY CORP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has slightly increased to $160.88 million or 2.41% when compared to the same quarter last year. Despite an increase in cash flow, BAYTEX ENERGY CORP's cash flow growth rate is still lower than the industry average growth rate of 20.63%.
  • The gross profit margin for BAYTEX ENERGY CORP is rather high; currently it is at 50.50%. Regardless of BTE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BTE's net profit margin of 12.94% compares favorably to the industry average.
  • BAYTEX ENERGY CORP's earnings per share declined by 45.8% 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, BAYTEX ENERGY CORP increased its bottom line by earning $2.14 versus $1.83 in the prior year.
  • BTE, with its decline in revenue, underperformed when compared the industry average of 1.1%. Since the same quarter one year prior, revenues fell by 20.2%. Weakness in the company's revenue seems to have hurt the 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.

Great Northern Iron Ore

Dividend Yield: 14.20%

Great Northern Iron Ore (NYSE: GNI) shares currently have a dividend yield of 14.20%.

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 4.75.

The average volume for Great Northern Iron Ore has been 23,500 shares per day over the past 30 days. Great Northern Iron Ore has a market cap of $95.3 million and is part of the metals & mining industry. Shares are down 3.8% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Great Northern Iron Ore as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, expanding profit margins and notable return on equity. 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:
  • GNI 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. To add to this, GNI has a quick ratio of 1.65, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for GREAT NORTHERN IRON ORE PPTY is currently very high, coming in at 77.70%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, GNI's net profit margin of 77.69% significantly outperformed against the industry.
  • The revenue fell significantly faster than the industry average of 4.6%. 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 significantly 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.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Metals & Mining industry and the overall market, GREAT NORTHERN IRON ORE PPTY's return on equity significantly exceeds 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.

Medley Capital

Dividend Yield: 10.10%

Medley Capital (NYSE: MCC) shares currently have a dividend yield of 10.10%.

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 10.22.

The average volume for Medley Capital has been 471,000 shares per day over the past 30 days. Medley Capital has a market cap of $407.3 million and is part of the financial services industry. Shares are down 0.5% 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 10.4%. 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 33.81% 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 ($1.49 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: 7.50%

Exterran Partners L.P (NASDAQ: EXLP) shares currently have a dividend yield of 7.50%.

Exterran Partners, L.P., together with its subsidiaries, provides natural gas contract operations services to customers in the United States. The company has a P/E ratio of 194.00.

The average volume for Exterran Partners L.P has been 214,300 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 34% 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 8.0%. 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 28.82%.

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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