What To Buy: Top 5 Buy-Rated Dividend Stocks: LO, SEP, PAA, NNN, 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."

Lorillard

Dividend Yield: 5.10%

Lorillard (NYSE: LO) shares currently have a dividend yield of 5.10%.

Lorillard, Inc. manufactures and sells cigarettes in the United States. The company operates through two segments, Cigarettes and Electronic Cigarettes. The Cigarettes segment manufactures and sells cigarettes. The company has a P/E ratio of 13.52.

The average volume for Lorillard has been 3,556,900 shares per day over the past 30 days. Lorillard has a market cap of $16.2 billion and is part of the tobacco industry. Shares are up 11.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates Lorillard as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • LO's revenue growth has slightly outpaced the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 6.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • LORILLARD INC has improved earnings per share by 14.8% 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, LORILLARD INC increased its bottom line by earning $2.81 versus $2.67 in the prior year. This year, the market expects an improvement in earnings ($3.13 versus $2.81).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Tobacco industry average. The net income increased by 9.8% when compared to the same quarter one year prior, going from $284.00 million to $312.00 million.
  • Net operating cash flow has increased to -$517.00 million or 17.54% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -8.64%.
  • The gross profit margin for LORILLARD INC is rather high; currently it is at 53.57%. 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 24.22% trails the industry average.

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

Spectra Energy Partners

Dividend Yield: 4.80%

Spectra Energy Partners (NYSE: SEP) shares currently have a dividend yield of 4.80%.

Spectra Energy Partners, LP operates as an investment arm of Spectra Energy Corp. The company has a P/E ratio of 26.30.

The average volume for Spectra Energy Partners has been 286,800 shares per day over the past 30 days. Spectra Energy Partners has a market cap of $4.6 billion and is part of the energy industry. Shares are up 32.9% year to date as of the close of trading on Monday.

TheStreet Ratings rates Spectra Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins 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 net income growth 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 increased by 5.1% when compared to the same quarter one year prior, going from $46.90 million to $49.30 million.
  • The gross profit margin for SPECTRA ENERGY PARTNERS LP is rather high; currently it is at 62.74%. Regardless of SEP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SEP's net profit margin of 86.64% significantly outperformed against the industry.
  • Compared to its closing price of one year ago, SEP's share price has jumped by 31.09%, exceeding the performance of the broader market during that same time frame. 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.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 10.3%. Since the same quarter one year prior, revenues slightly dropped by 3.1%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • SPECTRA ENERGY PARTNERS LP's earnings per share declined by 14.3% 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, SPECTRA ENERGY PARTNERS LP increased its bottom line by earning $1.70 versus $1.64 in the prior year. For the next year, the market is expecting a contraction of 8.8% in earnings ($1.55 versus $1.70).

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

Plains All American Pipeline

Dividend Yield: 4.50%

Plains All American Pipeline (NYSE: PAA) shares currently have a dividend yield of 4.50%.

Plains All American Pipeline, L.P., through its subsidiaries, engages in the transportation, storage, terminalling, and marketing of crude oil and refined products in the United States and Canada. The company operates in three segments: Transportation, Facilities, and Supply and Logistics. The company has a P/E ratio of 18.48.

The average volume for Plains All American Pipeline has been 1,170,000 shares per day over the past 30 days. Plains All American Pipeline has a market cap of $17.7 billion and is part of the energy industry. Shares are up 14.1% year to date as of the close of trading on Monday.

TheStreet Ratings rates Plains All American Pipeline as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. 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 10.3%. Since the same quarter one year prior, revenues slightly increased by 5.2%. 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 significantly increased by 1054.83% to $358.00 million when compared to the same quarter last year. In addition, PLAINS ALL AMER PIPELNE -LP has also vastly surpassed the industry average cash flow growth rate of -17.92%.
  • PLAINS ALL AMER PIPELNE -LP's earnings per share declined by 38.4% 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, PLAINS ALL AMER PIPELNE -LP reported lower earnings of $2.40 versus $2.44 in the prior year. This year, the market expects an improvement in earnings ($3.05 versus $2.40).
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, PLAINS ALL AMER PIPELNE -LP has underperformed in comparison with the industry average, but has exceeded 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.

National Retail Properties

Dividend Yield: 5.10%

National Retail Properties (NYSE: NNN) shares currently have a dividend yield of 5.10%.

National Retail Properties, Inc. is a publicly owned equity real estate investment trust. The firm acquires, owns, manages, and develops retail properties in the United States. The company has a P/E ratio of 30.09.

The average volume for National Retail Properties has been 1,517,600 shares per day over the past 30 days. National Retail Properties has a market cap of $3.9 billion and is part of the real estate industry. Shares are up 2.1% year to date as of the close of trading on Monday.

TheStreet Ratings rates National Retail Properties as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, expanding profit margins, good cash flow from operations and increase in stock price during the past year. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • NATIONAL RETAIL PROPERTIES has improved earnings per share by 13.0% 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, NATIONAL RETAIL PROPERTIES increased its bottom line by earning $0.98 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($1.07 versus $0.98).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 10.8%. Since the same quarter one year prior, revenues slightly increased by 7.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for NATIONAL RETAIL PROPERTIES is rather high; currently it is at 62.25%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 38.84% is above that of the industry average.
  • Net operating cash flow has increased to $55.37 million or 12.60% when compared to the same quarter last year. In addition, NATIONAL RETAIL PROPERTIES has also modestly surpassed the industry average cash flow growth rate of 5.77%.
  • In its most recent trading session, NNN 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 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.

CVR Energy

Dividend Yield: 6.80%

CVR Energy (NYSE: CVI) shares currently have a dividend yield of 6.80%.

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 6.45.

The average volume for CVR Energy has been 631,400 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 9.1% year to date as of the close of trading on Monday.

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 52.26% 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 ($4.58 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 $183.37 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. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, CVR ENERGY INC's return on equity exceeds that of the industry average and significantly exceeds 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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