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."

Companhia de Bebidas das Americas Ambev

Dividend Yield: 4.20%

Companhia de Bebidas das Americas Ambev (NYSE: ABV) shares currently have a dividend yield of 4.20%.

Companhia de Bebidas das Americas Ambev engages in the production, distribution, and sale of beer, draft beer, carbonated soft drinks, malt, and other non-alcoholic and non-carbonated products in the Americas. It also sells bottled water, isotonics, and ready-to-drink teas. The company has a P/E ratio of 103.62.

The average volume for Companhia de Bebidas das Americas Ambev has been 2,105,400 shares per day over the past 30 days. Companhia de Bebidas das Americas Ambev has a market cap of $131.4 billion and is part of the food & beverage industry. Shares are down 2.7% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Companhia de Bebidas das Americas Ambev as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • ABV's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 9.6%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • COMPANHIA DE BEBIDAS DAS AME has improved earnings per share by 9.6% 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, COMPANHIA DE BEBIDAS DAS AME increased its bottom line by earning $1.64 versus $1.49 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.64).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Beverages industry average. The net income increased by 11.2% when compared to the same quarter one year prior, going from $1,604.89 million to $1,784.44 million.
  • 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 Beverages industry and the overall market, COMPANHIA DE BEBIDAS DAS AME's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for COMPANHIA DE BEBIDAS DAS AME is rather high; currently it is at 69.90%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.84% significantly outperformed against the industry average.

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AstraZeneca

Dividend Yield: 7.30%

AstraZeneca (NYSE: AZN) shares currently have a dividend yield of 7.30%.

AstraZeneca PLC engages in the discovery, development, and commercialization of prescription medicines for cardiovascular, gastrointestinal, neuroscience, infection, oncology, and respiratory and inflammation diseases worldwide. The company has a P/E ratio of 10.40.

The average volume for AstraZeneca has been 2,154,500 shares per day over the past 30 days. AstraZeneca has a market cap of $64.7 billion and is part of the drugs industry. Shares are up 9.1% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates AstraZeneca as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels, 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:
  • 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.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.14, which illustrates the ability to avoid short-term cash problems.
  • ASTRAZENECA PLC has improved earnings per share by 8.0% 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, ASTRAZENECA PLC reported lower earnings of $4.98 versus $7.27 in the prior year. This year, the market expects an improvement in earnings ($5.35 versus $4.98).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Pharmaceuticals industry average. The net income increased by 2.4% when compared to the same quarter one year prior, going from $1,486.00 million to $1,521.00 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.

Williams Partners

Dividend Yield: 6.20%

Williams Partners (NYSE: WPZ) shares currently have a dividend yield of 6.20%.

Williams Partners L.P., an energy infrastructure company, focuses on connecting North America's hydrocarbon resource plays to growing markets for natural gas and natural gas liquids (NGL). It operates in two segments, Gas Pipeline and Midstream Gas & Liquids. The company has a P/E ratio of 28.92.

The average volume for Williams Partners has been 1,146,300 shares per day over the past 30 days. Williams Partners has a market cap of $21.7 billion and is part of the chemicals industry. Shares are up 6% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Williams Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • WPZ's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 0.7%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Net operating cash flow has slightly increased to $688.00 million or 6.00% when compared to the same quarter last year. In addition, WILLIAMS PARTNERS LP has also modestly surpassed the industry average cash flow growth rate of 0.00%.
  • 38.70% is the gross profit margin for WILLIAMS PARTNERS LP which we consider to be strong. Regardless of WPZ's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, WPZ's net profit margin of 16.00% compares favorably to the industry average.
  • WPZ's debt-to-equity ratio of 0.95 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.43 is very low and demonstrates very weak liquidity.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, WILLIAMS PARTNERS LP has underperformed in comparison with the industry average, but has exceeded that of 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.

Royal Dutch Shell

Dividend Yield: 4.30%

Royal Dutch Shell (NYSE: RDS.A) shares currently have a dividend yield of 4.30%.

Royal Dutch Shell plc operates as an independent oil and gas company worldwide. The company explores for and extracts crude oil, natural gas, and natural gas liquids. The company has a P/E ratio of 8.60.

The average volume for Royal Dutch Shell has been 3,093,000 shares per day over the past 30 days. Royal Dutch Shell has a market cap of $214.3 billion and is part of the energy industry. Shares are down 1.8% year to date as of the close of trading on Wednesday.

TheStreet Ratings rates Royal Dutch Shell as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, increase in net income and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • RDS.A's revenue growth has slightly outpaced the industry average of 0.7%. Since the same quarter one year prior, revenues slightly increased by 2.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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 2.6% when compared to the same quarter one year prior, going from $6,500.00 million to $6,671.00 million.
  • Net operating cash flow has significantly increased by 53.33% to $9,913.00 million when compared to the same quarter last year. In addition, ROYAL DUTCH SHELL PLC has also vastly surpassed the industry average cash flow growth rate of 0.00%.
  • RDS.A's debt-to-equity ratio is very low at 0.20 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 0.74 is somewhat weak and could be cause for future 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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