3 Buy-Rated Dividend Stocks: BWP, TRP, AEE

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 3 stocks with substantial yields, that ultimately, we have rated "Buy."

Boardwalk Pipeline Partners

Dividend Yield: 7.30%

Boardwalk Pipeline Partners (NYSE: BWP) shares currently have a dividend yield of 7.30%.

Boardwalk Pipeline Partners, LP, through its subsidiaries, engages in the ownership and operation of integrated natural gas and natural gas liquids (NGLs) pipelines, and storage systems in the United States. The company also transports, stores, gathers, and processes natural gas and NGLs. The company has a P/E ratio of 21.45

The average volume for Boardwalk Pipeline Partners has been 798,400 shares per day over the past 30 days Boardwalk Pipeline Partners has a market cap of $6.1 billion and is part of the energy industry Shares are up 19.2% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Boardwalk Pipeline 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, expanding profit margins and increase in stock price during the past year. 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 10.7%. Since the same quarter one year prior, revenues slightly increased by 5.0%. 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.
  • 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 9.5% when compared to the same quarter one year prior, going from $92.60 million to $101.40 million.
  • Net operating cash flow has increased to $129.30 million or 17.75% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -25.51%.
  • The gross profit margin for BOARDWALK PIPELINE PRTNRS-LP is rather high; currently it is at 63.00%. Regardless of BWP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, BWP's net profit margin of 30.86% 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. 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TransCanada

Dividend Yield: 4.10%

TransCanada (NYSE: TRP) shares currently have a dividend yield of 4.10%.

TransCanada Corporation operates as an energy infrastructure company in North America. The company operates in three segments: Natural Gas Pipelines, Oil Pipelines, and Energy. The company has a P/E ratio of 22.04

The average volume for TransCanada has been 569,200 shares per day over the past 30 days TransCanada has a market cap of $30.2 billion and is part of the utilities industry Shares are down 9.1% year to date as of the close of trading on Tuesday

TheStreet Ratings rates TransCanada 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, expanding profit margins and increase in stock price during the past year. 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 10.7%. Since the same quarter one year prior, revenues rose by 15.8%. 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 25.9% when compared to the same quarter one year prior, rising from $366.00 million to $461.00 million.
  • Net operating cash flow has slightly increased to $706.00 million or 5.05% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -25.51%.
  • The gross profit margin for TRANSCANADA CORP is rather high; currently it is at 50.00%. Regardless of TRP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TRP's net profit margin of 20.47% 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

Ameren

Dividend Yield: 4.90%

Ameren (NYSE: AEE) shares currently have a dividend yield of 4.90%.

Ameren Corporation operates as a public utility holding company in the United States. It operates in three segments: Ameren Missouri, Ameren Illinois, and Merchant Generation.

The average volume for Ameren has been 1,728,500 shares per day over the past 30 days Ameren has a market cap of $8.0 billion and is part of the utilities industry Shares are up 8.8% year to date as of the close of trading on Tuesday

TheStreet Ratings rates Ameren as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • AEE's revenue growth has slightly outpaced the industry average of 0.0%. Since the same quarter one year prior, revenues slightly increased by 4.5%. 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 significantly exceeded that of the S&P 500 and the Multi-Utilities industry. The net income increased by 64.0% when compared to the same quarter one year prior, rising from -$403.00 million to -$145.00 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.95, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.28 is very weak and demonstrates a lack of ability to pay short-term obligations.
  • AMEREN CORP has improved earnings per share by 46.7% 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, AMEREN CORP swung to a loss, reporting -$2.20 versus $2.14 in the prior year. This year, the market expects an improvement in earnings ($2.10 versus -$2.20).
  • In its most recent trading session, AEE 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. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

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