5 Buy-Rated Dividend Stocks: CTL, VZ, O, NGLS, CVI

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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."

CenturyLink

Dividend Yield: 6.40%

CenturyLink (NYSE: CTL) shares currently have a dividend yield of 6.40%.

CenturyLink, Inc. operates as an integrated telecommunications company in the United States. The company has a P/E ratio of 21.66.

The average volume for CenturyLink has been 5,295,300 shares per day over the past 30 days. CenturyLink has a market cap of $20.3 billion and is part of the telecommunications industry. Shares are down 7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates CenturyLink as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, good cash flow from operations, impressive record of earnings per share growth, expanding profit margins 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:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 263.5% when compared to the same quarter one year prior, rising from $74.00 million to $269.00 million.
  • Net operating cash flow has increased to $1,469.00 million or 20.80% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -5.02%.
  • CENTURYLINK INC 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, CENTURYLINK INC reported lower earnings of $1.24 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($2.71 versus $1.24).
  • The gross profit margin for CENTURYLINK INC is rather high; currently it is at 58.70%. Regardless of CTL's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.94% trails the industry average.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 2.0%. Since the same quarter one year prior, revenues slightly dropped by 1.9%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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

Verizon Communications

Dividend Yield: 4.20%

Verizon Communications (NYSE: VZ) shares currently have a dividend yield of 4.20%.

Verizon Communications Inc., through its subsidiaries, provides communications, information and entertainment products and services to consumers, businesses, and governmental agencies worldwide. The company has a P/E ratio of 90.54.

The average volume for Verizon Communications has been 11,157,600 shares per day over the past 30 days. Verizon Communications has a market cap of $139.9 billion and is part of the telecommunications industry. Shares are up 12.2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Verizon Communications 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 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:
  • VZ's revenue growth has slightly outpaced the industry average of 2.0%. Since the same quarter one year prior, revenues slightly increased by 4.3%. 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 exceeded that of the S&P 500 and greatly outperformed compared to the Diversified Telecommunication Services industry average. The net income increased by 23.1% when compared to the same quarter one year prior, going from $1,825.00 million to $2,246.00 million.
  • Net operating cash flow has slightly increased to $9,617.00 million or 3.25% when compared to the same quarter last year. In addition, VERIZON COMMUNICATIONS INC has also modestly surpassed the industry average cash flow growth rate of -5.02%.
  • The gross profit margin for VERIZON COMMUNICATIONS INC is rather high; currently it is at 62.96%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.54% trails the industry average.
  • VERIZON COMMUNICATIONS INC has improved earnings per share by 21.9% 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, VERIZON COMMUNICATIONS INC reported lower earnings of $0.31 versus $0.86 in the prior year. This year, the market expects an improvement in earnings ($2.79 versus $0.31).

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

Realty Income Corporation

Dividend Yield: 5.20%

Realty Income Corporation (NYSE: O) shares currently have a dividend yield of 5.20%.

Realty Income Corporation is a publicly traded real estate investment trust. It invests in the real estate markets of the United States. The firm makes investments in commercial real estate. Realty Income Corporation was founded in 1969 and is based in Escondido, California. The company has a P/E ratio of 51.65.

The average volume for Realty Income Corporation has been 2,228,900 shares per day over the past 30 days. Realty Income Corporation has a market cap of $8.2 billion and is part of the real estate industry. Shares are up 2.4% year to date as of the close of trading on Thursday.

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

Highlights from the ratings report include:
  • O's very impressive revenue growth greatly exceeded the industry average of 9.2%. Since the same quarter one year prior, revenues leaped by 62.9%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has significantly increased by 56.39% to $165.16 million when compared to the same quarter last year. In addition, REALTY INCOME CORP has also vastly surpassed the industry average cash flow growth rate of -0.31%.
  • 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.
  • 49.51% is the gross profit margin for REALTY INCOME CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, O's net profit margin of 29.65% compares favorably to the industry average.
  • REALTY INCOME CORP reported flat earnings per share in the most recent quarter. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, REALTY INCOME CORP reported lower earnings of $0.74 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.51 versus $0.74).

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

Targa Resources Partners

Dividend Yield: 5.80%

Targa Resources Partners (NYSE: NGLS) shares currently have a dividend yield of 5.80%.

Targa Resources Partners LP provides midstream natural gas, natural gas liquid (NGL), terminaling, and crude oil gathering services in the United States. The company operates in two divisions, Gathering and Processing, and Logistics and Marketing. The company has a P/E ratio of 129.84.

The average volume for Targa Resources Partners has been 366,600 shares per day over the past 30 days. Targa Resources Partners has a market cap of $5.2 billion and is part of the energy industry. Shares are up 32.4% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Targa Resources Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. 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:
  • The revenue growth came in higher than the industry average of 10.2%. Since the same quarter one year prior, revenues slightly increased by 9.3%. 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.
  • NGLS's share price has surged by 25.82% over the past year, reflecting the market's general trend, despite their weak earnings growth during the last quarter. We feel that the stock's sharp appreciation over the last year has driven it to a price level which is now somewhat expensive compared to the rest of its industry. The other strengths this company shows, however, justify the higher price levels.
  • TARGA RESOURCES PARTNERS LP 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. Earnings per share have declined over the last year. We anticipate that this should continue in the coming year. During the past fiscal year, TARGA RESOURCES PARTNERS LP reported lower earnings of $1.20 versus $1.98 in the prior year. For the next year, the market is expecting a contraction of 16.7% in earnings ($1.00 versus $1.20).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed against the S&P 500 and did not exceed that of the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 43.9% when compared to the same quarter one year ago, falling from $46.90 million to $26.30 million.
  • The debt-to-equity ratio of 1.45 is relatively high when compared with the industry average, suggesting a need for better debt level management. Along with the unfavorable debt-to-equity ratio, NGLS maintains a poor quick ratio of 0.82, which illustrates the inability to avoid short-term cash problems.

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

CVR Energy

Dividend Yield: 6.70%

CVR Energy (NYSE: CVI) shares currently have a dividend yield of 6.70%.

CVR Energy, Inc., through its subsidiaries, engages in petroleum refining and nitrogen fertilizer manufacturing activities in the United States. The company operates through two segments, Petroleum and Nitrogen Fertilizer. The company has a P/E ratio of 6.49.

The average volume for CVR Energy has been 639,800 shares per day over the past 30 days. CVR Energy has a market cap of $3.9 billion and is part of the energy industry. Shares are down 12.5% year to date as of the close of trading on Thursday.

TheStreet Ratings rates CVR Energy as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 50.52% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, CVI should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • CVR ENERGY INC has improved earnings per share by 20.6% 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, CVR ENERGY INC increased its bottom line by earning $4.33 versus $3.94 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $4.33).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Oil, Gas & Consumable Fuels industry average. The net income increased by 18.5% when compared to the same quarter one year prior, going from $154.73 million to $183.40 million.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CVR ENERGY INC's return on equity significantly exceeds that of both the industry average and the S&P 500.

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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