4 Buy-Rated Dividend Stocks: CXS, BKCC, GNI, EXLP

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."

CreXus Investment

Dividend Yield: 7.70%

CreXus Investment (NYSE: CXS) shares currently have a dividend yield of 7.70%.

CreXus Investment Corp., together with its subsidiaries, operates as a commercial real estate company. The company has a P/E ratio of 15.71.

The average volume for CreXus Investment has been 658,200 shares per day over the past 30 days. CreXus Investment has a market cap of $999.3 million and is part of the real estate industry. Shares are up 6.4% year to date as of the close of trading on Friday.

TheStreet Ratings rates CreXus Investment as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins, good cash flow from operations 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:
  • The gross profit margin for CREXUS INVESTMENT CORP is rather high; currently it is at 62.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 61.15% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 106.93% to $11.69 million when compared to the same quarter last year. In addition, CREXUS INVESTMENT CORP has also vastly surpassed the industry average cash flow growth rate of -20.78%.
  • CXS's share price has surged by 27.84% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CXS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CREXUS INVESTMENT CORP's earnings per share declined by 10.5% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, CREXUS INVESTMENT CORP reported lower earnings of $0.85 versus $1.59 in the prior year. This year, the market expects an improvement in earnings ($0.97 versus $0.85).
  • CXS, with its decline in revenue, underperformed when compared the industry average of 12.0%. Since the same quarter one year prior, revenues fell by 10.5%. 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.

BlackRock Kelso Capital Corporation

Dividend Yield: 10.40%

BlackRock Kelso Capital Corporation (NASDAQ: BKCC) shares currently have a dividend yield of 10.40%.

BlackRock Kelso Capital Corporation is a private equity firm specializing in investments in middle market companies. The firm invests in all industries. The company has a P/E ratio of 11.25.

The average volume for BlackRock Kelso Capital Corporation has been 739,500 shares per day over the past 30 days. BlackRock Kelso Capital Corporation has a market cap of $741.7 million and is part of the financial services industry. Shares are down 0.5% year to date as of the close of trading on Friday.

TheStreet Ratings rates BlackRock Kelso Capital Corporation as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, attractive valuation levels, good cash flow from operations, expanding profit margins and increase in stock price during the past year. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • 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 46.8% when compared to the same quarter one year prior, rising from $20.30 million to $29.80 million.
  • Net operating cash flow has significantly increased by 327.10% to $49.61 million when compared to the same quarter last year. In addition, BLACKROCK KELSO CAPITAL CORP has also vastly surpassed the industry average cash flow growth rate of -120.45%.
  • The gross profit margin for BLACKROCK KELSO CAPITAL CORP is rather high; currently it is at 58.10%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, BKCC's net profit margin of 95.71% significantly outperformed against the industry.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.

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: 13.20%

Great Northern Iron Ore (NYSE: GNI) shares currently have a dividend yield of 13.20%.

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 5.75.

The average volume for Great Northern Iron Ore has been 20,200 shares per day over the past 30 days. Great Northern Iron Ore has a market cap of $102.3 million and is part of the metals & mining industry. Shares are up 1.2% year to date as of the close of trading on Friday.

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, increase in stock price during the past year 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. Along with this, the company maintains a quick ratio of 2.93, which clearly demonstrates the ability to cover short-term cash needs.
  • The gross profit margin for GREAT NORTHERN IRON ORE PPTY is currently very high, coming in at 78.00%. Regardless of GNI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, GNI's net profit margin of 77.96% significantly outperformed against the industry.
  • Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. 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.
  • GNI, with its decline in revenue, underperformed when compared the industry average of 3.3%. Since the same quarter one year prior, revenues fell by 32.7%. 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 38.2% when compared to the same quarter one year ago, falling from $5.97 million to $3.69 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.

Exterran Partners L.P

Dividend Yield: 7.20%

Exterran Partners L.P (NASDAQ: EXLP) shares currently have a dividend yield of 7.20%.

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 80.06.

The average volume for Exterran Partners L.P has been 233,200 shares per day over the past 30 days. Exterran Partners L.P has a market cap of $1.4 billion and is part of the energy industry. Shares are up 42.2% 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 7.4%. Since the same quarter one year prior, revenues rose by 19.6%. 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 ($1.23 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 227.0% when compared to the same quarter one year prior, rising from $4.51 million to $14.73 million.
  • 43.80% 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 13.89% is above that of the industry average.
  • Net operating cash flow has significantly increased by 55.54% to $32.68 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 40.86%.

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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