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."

Terra Nitrogen Company L.P

Dividend Yield: 7.40%

Terra Nitrogen Company L.P (NYSE: TNH) shares currently have a dividend yield of 7.40%.

Terra Nitrogen Company, L.P. engages in the production and sale of nitrogen fertilizer products. It primarily offers anhydrous ammonia and urea ammonium nitrate solutions. Terra Nitrogen GP Inc. serves as the general partner of the company. Terra Nitrogen Company, L.P. The company has a P/E ratio of 11.49.

The average volume for Terra Nitrogen Company L.P has been 20,800 shares per day over the past 30 days. Terra Nitrogen Company L.P has a market cap of $3.6 billion and is part of the chemicals industry. Shares are down 7.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Terra Nitrogen Company L.P as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, 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 lackluster performance in the stock itself.

Highlights from the ratings report include:
  • TERRA NITROGEN CO -LP has improved earnings per share by 19.1% 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, TERRA NITROGEN CO -LP increased its bottom line by earning $17.06 versus $15.33 in the prior year.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Chemicals industry average. The net income increased by 15.6% when compared to the same quarter one year prior, going from $129.80 million to $150.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 5.5%. Since the same quarter one year prior, revenues slightly increased by 2.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • TNH 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 6.14, which clearly demonstrates the ability to cover short-term cash needs.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Chemicals industry and the overall market, TERRA NITROGEN CO -LP's return on equity significantly exceeds that of both the industry average and the S&P 500.

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Educational Development Corporation

Dividend Yield: 9.20%

Educational Development Corporation (NASDAQ: EDUC) shares currently have a dividend yield of 9.20%.

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 10.81.

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 $13.7 million and is part of the media industry. Shares are down 9.2% year to date as of the close of trading on Thursday.

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 0.4%. 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.

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Intersections

Dividend Yield: 8.80%

Intersections (NASDAQ: INTX) shares currently have a dividend yield of 8.80%.

Intersections Inc. provides consumer identity risk management services in the United States. Its services help consumers understand and monitor their credit profiles and other personal information, and protect themselves against identity theft or fraud. The company has a P/E ratio of 8.77.

The average volume for Intersections has been 77,200 shares per day over the past 30 days. Intersections has a market cap of $164.5 million and is part of the diversified services industry. Shares are down 3.8% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Intersections 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, notable return on equity, reasonable valuation levels, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • INTX's debt-to-equity ratio is very low at 0.02 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, INTX has a quick ratio of 1.60, which demonstrates the ability of the company to cover short-term liquidity 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. Compared to other companies in the Commercial Services & Supplies industry and the overall market, INTERSECTIONS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $10.33 million or 27.91% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -20.97%.
  • The gross profit margin for INTERSECTIONS INC is rather high; currently it is at 67.90%. Regardless of INTX's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.90% trails 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.

AllianceBernstein Holding L.P

Dividend Yield: 7.10%

AllianceBernstein Holding L.P (NYSE: AB) shares currently have a dividend yield of 7.10%.

AllianceBernstein Holding L.P. provides investment management and related services in the United States and internationally. The company has a P/E ratio of 43.90.

The average volume for AllianceBernstein Holding L.P has been 353,300 shares per day over the past 30 days. AllianceBernstein Holding L.P has a market cap of $2.4 billion and is part of the financial services industry. Shares are up 28.5% year to date as of the close of trading on Thursday.

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 10.8%. 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 ($1.52 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 -78.32%.
  • 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: 9.30%

THL Credit (NASDAQ: TCRD) shares currently have a dividend yield of 9.30%.

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 10.26.

The average volume for THL Credit has been 222,800 shares per day over the past 30 days. THL Credit has a market cap of $372.6 million and is part of the financial services industry. Shares are down 4.3% year to date as of the close of trading on Thursday.

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, increase in stock price during the past year, 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 10.4%. 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 risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.

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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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