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."

PennyMac Mortgage Investment

Dividend Yield: 9.30%

PennyMac Mortgage Investment (NYSE: PMT) shares currently have a dividend yield of 9.30%.

PennyMac Mortgage Investment Trust, a specialty finance company, through its subsidiaries, invests primarily in residential mortgage loans and mortgage-related assets. The company operates in two segments, Correspondent Lending and Investment Activities. The company has a P/E ratio of 7.84.

The average volume for PennyMac Mortgage Investment has been 1,084,900 shares per day over the past 30 days. PennyMac Mortgage Investment has a market cap of $1.5 billion and is part of the real estate industry. Shares are up 0.1% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates PennyMac Mortgage Investment as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, attractive valuation levels, solid stock price performance and impressive record of earnings per share growth. 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:
  • PMT's very impressive revenue growth greatly exceeded the industry average of 10.1%. Since the same quarter one year prior, revenues leaped by 155.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market, PENNYMAC MORTGAGE INVEST TR's return on equity exceeds that of both the industry average and the S&P 500.
  • Powered by its strong earnings growth of 38.46% and other important driving factors, this stock has surged by 26.33% 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, PMT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • PENNYMAC MORTGAGE INVEST TR has improved earnings per share by 38.5% 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, PENNYMAC MORTGAGE INVEST TR increased its bottom line by earning $3.08 versus $2.37 in the prior year. This year, the market expects an improvement in earnings ($3.30 versus $3.08).

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ONEOK Partners L.P

Dividend Yield: 5.60%

ONEOK Partners L.P (NYSE: OKS) shares currently have a dividend yield of 5.60%.

ONEOK Partners, L.P. engages in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in three segments: Natural Gas Gathering and Processing, Natural Gas Pipelines, and Natural Gas Liquids. The company has a P/E ratio of 20.07.

The average volume for ONEOK Partners L.P has been 581,000 shares per day over the past 30 days. ONEOK Partners L.P has a market cap of $7.5 billion and is part of the energy industry. Shares are down 6% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates ONEOK Partners L.P as a buy. Among the primary strengths of the company is its reasonable valuation levels, considering its current price compared to earnings, book value and other measures. 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:
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.7%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of ONEOK PARTNERS -LP has not done very well: it is down 12.67% and has underperformed the S&P 500, in part reflecting the company's sharply declining earnings per share when compared to the year-earlier quarter. Looking ahead, although the push and pull of the overall market trend could certainly make a critical difference, we do not see any strong reason stemming from the company's fundamentals that would cause a continuation of last year's decline. In fact, the stock is now selling for less than others in its industry in relation to its current earnings.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness 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, ONEOK PARTNERS -LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • Net operating cash flow has decreased to $181.44 million or 17.21% when compared to the same quarter last year. Despite a decrease in cash flow of 17.21%, ONEOK PARTNERS -LP is in line with the industry average cash flow growth rate of -23.86%.

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Access Midstream Partners

Dividend Yield: 4.30%

Access Midstream Partners (NYSE: ACMP) shares currently have a dividend yield of 4.30%.

Access Midstream Partners, L.P. owns, operates, develops, and acquires natural gas, natural gas liquids and oil gathering systems, and other midstream energy assets in the United States. It focuses on natural gas and natural gas liquids gathering operations. The company has a P/E ratio of 47.24.

The average volume for Access Midstream Partners has been 544,600 shares per day over the past 30 days. Access Midstream Partners has a market cap of $4.6 billion and is part of the energy industry. Shares are up 29.4% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Access Midstream Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, expanding profit margins and solid stock price performance. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • ACMP's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 53.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant 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 13.7% when compared to the same quarter one year prior, going from $52.37 million to $59.54 million.
  • Net operating cash flow has increased to $80.13 million or 19.21% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -23.86%.
  • The gross profit margin for ACCESS MIDSTREAM PARTNERS LP is rather high; currently it is at 65.10%. Regardless of ACMP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ACMP's net profit margin of 25.12% significantly outperformed against the industry.
  • Compared to its closing price of one year ago, ACMP's share price has jumped by 51.07%, exceeding the performance of the broader market during that same time frame. Looking ahead, the stock's sharp 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 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.

Energy Transfer Partners L.P

Dividend Yield: 7.50%

Energy Transfer Partners L.P (NYSE: ETP) shares currently have a dividend yield of 7.50%.

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company has a P/E ratio of 10.85.

The average volume for Energy Transfer Partners L.P has been 1,643,100 shares per day over the past 30 days. Energy Transfer Partners L.P has a market cap of $14.6 billion and is part of the energy industry. Shares are up 11% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Energy Transfer Partners L.P as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, attractive valuation levels, notable return on equity and impressive record of earnings per share growth. 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:
  • ETP's very impressive revenue growth greatly exceeded the industry average of 6.7%. Since the same quarter one year prior, revenues leaped by 508.4%. 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 Oil, Gas & Consumable Fuels industry. The net income increased by 49.0% when compared to the same quarter one year prior, rising from $206.00 million to $307.00 million.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, ENERGY TRANSFER PARTNERS -LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • ENERGY TRANSFER 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, ENERGY TRANSFER PARTNERS -LP increased its bottom line by earning $6.68 versus $2.17 in the prior year. For the next year, the market is expecting a contraction of 68.2% in earnings ($2.13 versus $6.68).

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.

Hawaiian Electric Industries

Dividend Yield: 4.40%

Hawaiian Electric Industries (NYSE: HE) shares currently have a dividend yield of 4.40%.

Hawaiian Electric Industries, Inc., through its subsidiaries, primarily engages in electric utility and banking businesses primarily in Hawaii. It operates in two segments, Electric Utility and Bank. The company has a P/E ratio of 19.71.

The average volume for Hawaiian Electric Industries has been 481,600 shares per day over the past 30 days. Hawaiian Electric Industries has a market cap of $2.7 billion and is part of the utilities industry. Shares are up 11.3% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Hawaiian Electric Industries 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 and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • HAWAIIAN ELECTRIC INDS has exprienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, HAWAIIAN ELECTRIC INDS reported lower earnings of $1.43 versus $1.44 in the prior year. This year, the market expects an improvement in earnings ($1.65 versus $1.43).
  • HE, with its decline in revenue, underperformed when compared the industry average of 13.0%. Since the same quarter one year prior, revenues slightly dropped by 1.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.05, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry.
  • In its most recent trading session, HE 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • The gross profit margin for HAWAIIAN ELECTRIC INDS is currently extremely low, coming in at 14.10%. Regardless of HE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.70% 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.

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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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