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."

Suburban Propane Partners

Dividend Yield: 7.20%

Suburban Propane Partners (NYSE: SPH) shares currently have a dividend yield of 7.20%.

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 110.64.

The average volume for Suburban Propane Partners has been 200,900 shares per day over the past 30 days. Suburban Propane Partners has a market cap of $2.8 billion and is part of the utilities industry. Shares are up 23.4% year to date as of the close of trading on Friday.

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, increase in stock price during the past year 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:
  • SPH's very impressive revenue growth greatly exceeded the industry average of 3.2%. 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 33.36%.
  • 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. The stock's price rise over the last year has driven it to a level which is somewhat expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • 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).

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: 9.00%

Educational Development Corporation (NASDAQ: EDUC) shares currently have a dividend yield of 9.00%.

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 11.06.

The average volume for Educational Development Corporation has been 6,900 shares per day over the past 30 days. Educational Development Corporation has a market cap of $14.1 million and is part of the media industry. Shares are down 7.1% 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 0.0%. 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.

THL Credit

Dividend Yield: 8.80%

THL Credit (NASDAQ: TCRD) shares currently have a dividend yield of 8.80%.

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 10.88.

The average volume for THL Credit has been 226,700 shares per day over the past 30 days. THL Credit has a market cap of $395.0 million and is part of the financial services industry. Shares are up 1.5% year to date as of the close of trading on Friday.

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, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • TCRD's very impressive revenue growth greatly exceeded the industry average of 4.7%. 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 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 38.1% when compared to the same quarter one year prior, rising from $7.08 million to $9.78 million.
  • 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.

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: 7.30%

Exterran Partners L.P (NASDAQ: EXLP) shares currently have a dividend yield of 7.30%.

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 201.50.

The average volume for Exterran Partners L.P has been 214,100 shares per day over the past 30 days. Exterran Partners L.P has a market cap of $1.2 billion and is part of the energy industry. Shares are up 39.2% year to date as of the close of trading on Friday.

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 7.6%. 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 32.02%.

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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