4 Buy-Rated Dividend Stocks Taking The Lead: XEL, VCI, RGP, TAL

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."

Xcel Energy

Dividend Yield: 4.10%

Xcel Energy (NYSE: XEL) shares currently have a dividend yield of 4.10%.

Xcel Energy Inc., through its subsidiaries, engages in the generation, purchase, transmission, distribution, and sale of electricity in the United States. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company has a P/E ratio of 13.86.

The average volume for Xcel Energy has been 3,535,700 shares per day over the past 30 days. Xcel Energy has a market cap of $13.7 billion and is part of the utilities industry. Shares are up 2.7% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Xcel Energy as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, revenue growth, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • XCEL ENERGY INC has improved earnings per share by 5.3% 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, XCEL ENERGY INC increased its bottom line by earning $1.86 versus $1.73 in the prior year. This year, the market expects an improvement in earnings ($1.90 versus $1.86).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Electric Utilities industry average, but is less than that of the S&P 500. The net income increased by 7.5% when compared to the same quarter one year prior, going from $183.06 million to $196.86 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 17.1%. Since the same quarter one year prior, revenues rose by 13.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 Electric Utilities industry and the overall market on the basis of return on equity, XCEL ENERGY INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • Net operating cash flow has increased to $431.90 million or 11.36% when compared to the same quarter last year. Despite an increase in cash flow, XCEL ENERGY INC's cash flow growth rate is still lower than the industry average growth rate of 21.41%.

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

Valassis Communications

Dividend Yield: 4.40%

Valassis Communications (NYSE: VCI) shares currently have a dividend yield of 4.40%.

Valassis Communications, Inc., together with its subsidiaries, provides media solutions primarily in the United States and Europe. The company has a P/E ratio of 9.69.

The average volume for Valassis Communications has been 397,700 shares per day over the past 30 days. Valassis Communications has a market cap of $1.1 billion and is part of the media industry. Shares are up 10.5% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Valassis Communications as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, increase in net income, notable return on equity and attractive valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • 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. 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.
  • VALASSIS COMMUNICATIONS INC has improved earnings per share by 33.3% 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 year. We feel that this trend should continue. During the past fiscal year, VALASSIS COMMUNICATIONS INC increased its bottom line by earning $2.86 versus $2.35 in the prior year. This year, the market expects an improvement in earnings ($3.06 versus $2.86).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Media industry average. The net income increased by 23.4% when compared to the same quarter one year prior, going from $21.71 million to $26.79 million.
  • 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 Media industry and the overall market, VALASSIS COMMUNICATIONS 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.

Regency Energy Partners

Dividend Yield: 6.80%

Regency Energy Partners (NYSE: RGP) shares currently have a dividend yield of 6.80%.

Regency Energy Partners LP engages in gathering, treating, processing, compressing, and transporting natural gas and natural gas liquids (NGLs). The company operates in Gathering and Processing, Natural Gas Transportation, NGL Services, and Contract Services segments.

The average volume for Regency Energy Partners has been 638,400 shares per day over the past 30 days. Regency Energy Partners has a market cap of $5.8 billion and is part of the energy industry. Shares are up 27.3% year to date as of the close of trading on Thursday.

TheStreet Ratings rates Regency Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations 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:
  • Net operating cash flow has increased to $67.00 million or 19.49% when compared to the same quarter last year. In addition, REGENCY ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -86.32%.
  • 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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.2%. Since the same quarter one year prior, revenues slightly dropped by 2.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • REGENCY ENERGY 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. 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, REGENCY ENERGY PARTNERS LP reported lower earnings of $0.12 versus $0.29 in the prior year. This year, the market expects an improvement in earnings ($0.30 versus $0.12).
  • RGP's debt-to-equity ratio of 0.66 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further. Despite the fact that RGP's debt-to-equity ratio is mixed in its results, the company's quick ratio of 0.68 is low and demonstrates weak liquidity.

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

TAL International Group

Dividend Yield: 6.50%

TAL International Group (NYSE: TAL) shares currently have a dividend yield of 6.50%.

TAL International Group, Inc. engages in leasing intermodal containers and chassis worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The company has a P/E ratio of 9.89.

The average volume for TAL International Group has been 376,000 shares per day over the past 30 days. TAL International Group has a market cap of $1.4 billion and is part of the diversified services industry. Shares are up 15.9% year to date as of the close of trading on Thursday.

TheStreet Ratings rates TAL International Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. 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:
  • TAL's revenue growth has slightly outpaced the industry average of 8.1%. Since the same quarter one year prior, revenues rose by 14.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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. 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.
  • TAL INTERNATIONAL GROUP INC has improved earnings per share by 28.7% 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, TAL INTERNATIONAL GROUP INC increased its bottom line by earning $3.87 versus $3.36 in the prior year. This year, the market expects an improvement in earnings ($4.35 versus $3.87).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Trading Companies & Distributors industry average. The net income increased by 29.3% when compared to the same quarter one year prior, rising from $29.30 million to $37.88 million.
  • 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 Trading Companies & Distributors industry and the overall market, TAL INTERNATIONAL GROUP INC's return on equity 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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