Buy-Rated Dividend Stocks: Top 4 Companies: ARI, NTE, BPT, NMFC

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

Apollo Commercial Real Estate Finance

Dividend Yield: 10.80%

Apollo Commercial Real Estate Finance (NYSE: ARI) shares currently have a dividend yield of 10.80%.

Apollo Commercial Real Estate Finance, Inc. operates as a commercial real estate finance company in the United States. The company has a P/E ratio of 11.25.

The average volume for Apollo Commercial Real Estate Finance has been 345,100 shares per day over the past 30 days. Apollo Commercial Real Estate Finance has a market cap of $547.7 million and is part of the real estate industry. Shares are down 7.5% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Apollo Commercial Real Estate Finance as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, 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:
  • The revenue growth came in higher than the industry average of 10.6%. Since the same quarter one year prior, revenues rose by 31.1%. 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 gross profit margin for APOLLO COMMERCIAL RE FIN INC is currently very high, coming in at 77.82%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 64.75% significantly outperformed against the industry average.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Real Estate Investment Trusts (REITs) industry average, but is greater than that of the S&P 500. The net income increased by 19.0% when compared to the same quarter one year prior, going from $9.91 million to $11.79 million.
  • APOLLO COMMERCIAL RE FIN INC's earnings per share declined by 42.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, APOLLO COMMERCIAL RE FIN INC increased its bottom line by earning $1.68 versus $1.34 in the prior year. For the next year, the market is expecting a contraction of 15.5% in earnings ($1.42 versus $1.68).
  • The share price of APOLLO COMMERCIAL RE FIN INC has not done very well: it is down 10.01% 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.

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

Nam Tai Electronics

Dividend Yield: 8.10%

Nam Tai Electronics (NYSE: NTE) shares currently have a dividend yield of 8.10%.

Nam Tai Electronics, Inc. provides electronics manufacturing and design services to the original equipment manufacturers of telecommunication and consumer electronic products. The company has a P/E ratio of 4.47.

The average volume for Nam Tai Electronics has been 631,600 shares per day over the past 30 days. Nam Tai Electronics has a market cap of $332.4 million and is part of the electronics industry. Shares are down 46.2% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Nam Tai Electronics as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and solid stock price performance. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • NTE's very impressive revenue growth greatly exceeded the industry average of 3.8%. Since the same quarter one year prior, revenues leaped by 64.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • NTE 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. To add to this, NTE has a quick ratio of 2.15, which demonstrates the ability of the company to cover short-term liquidity needs.
  • 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. In comparison to the other companies in the Electronic Equipment, Instruments & Components industry and the overall market, NAM TAI ELECTRONIC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. 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.

BP Prudhoe Bay Royalty

Dividend Yield: 10.30%

BP Prudhoe Bay Royalty (NYSE: BPT) shares currently have a dividend yield of 10.30%.

BP Prudhoe Bay Royalty Trust operates as a grantor trust in the United States. The company holds overriding royalty interests constituting a non-operational interest in minerals in the Prudhoe Bay oil field located on the North Slope in Alaska. The company has a P/E ratio of 31.45.

The average volume for BP Prudhoe Bay Royalty has been 127,900 shares per day over the past 30 days. BP Prudhoe Bay Royalty has a market cap of $1.8 billion and is part of the energy industry. Shares are up 21.6% year to date as of the close of trading on Thursday.

TheStreet Ratings rates BP Prudhoe Bay Royalty 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 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:
  • BPT 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. To add to this, BPT has a quick ratio of 2.31, which demonstrates the ability of the company to cover short-term liquidity needs.
  • The gross profit margin for BP PRUDHOE BAY ROYALTY TRUST is currently very high, coming in at 100.00%. BPT has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, BPT's net profit margin of 99.28% significantly outperformed against the industry.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.1%. Since the same quarter one year prior, revenues slightly dropped by 8.5%. 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 Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 8.6% when compared to the same quarter one year ago, dropping from $56.56 million to $51.68 million.
  • 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, BP PRUDHOE BAY ROYALTY TRUST'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.

New Mountain Finance

Dividend Yield: 9.30%

New Mountain Finance (NYSE: NMFC) shares currently have a dividend yield of 9.30%.

New Mountain Finance Corporation operates as a closed-end, non-diversified management investment company. The company has a P/E ratio of 6.67.

The average volume for New Mountain Finance has been 396,900 shares per day over the past 30 days. New Mountain Finance has a market cap of $555.1 million and is part of the financial services industry. Shares are down 2.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates New Mountain Finance as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, good cash flow from operations, expanding profit margins and notable return on equity. 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 revenue growth came in higher than the industry average of 12.5%. Since the same quarter one year prior, revenues rose by 33.1%. 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 increased to -$15.76 million or 47.66% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 7.84%.
  • The gross profit margin for NEW MOUNTAIN FINANCE CORP is rather high; currently it is at 58.05%. Regardless of NMFC's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NMFC's net profit margin of 97.01% significantly outperformed against the industry.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, NEW MOUNTAIN FINANCE CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of 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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