Buy-Rated Dividend Stocks: Top 4 Companies: SCG, RDS.B, OHI, MWE

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."

SCANA

Dividend Yield: 4.40%

SCANA (NYSE: SCG) shares currently have a dividend yield of 4.40%.

Natural Gas Utility. SCANA Corporation is a public utility holding company. SCANA has 12 direct, wholly owned subsidiaries and an investment in ITC^DeltaCom, Inc., a telecommunications services company in the southeastern United States. The company has a P/E ratio of 13.58.

The average volume for SCANA has been 568,100 shares per day over the past 30 days. SCANA has a market cap of $6.5 billion and is part of the utilities industry. Shares are up 2% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates SCANA as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, compelling growth in net income, reasonable valuation levels 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:
  • The revenue growth came in higher than the industry average of 2.6%. Since the same quarter one year prior, revenues rose by 11.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SCANA CORP has improved earnings per share by 11.1% 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, SCANA CORP increased its bottom line by earning $3.14 versus $2.99 in the prior year. This year, the market expects an improvement in earnings ($3.37 versus $3.14).
  • 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 Multi-Utilities industry average. The net income increased by 19.4% when compared to the same quarter one year prior, going from $72.00 million to $86.00 million.
  • Net operating cash flow has increased to $300.00 million or 18.11% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 4.31%.

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

Royal Dutch Shell

Dividend Yield: 5.30%

Royal Dutch Shell (NYSE: RDS.B) shares currently have a dividend yield of 5.30%.

Royal Dutch Shell plc operates as an independent oil and gas company worldwide. The company explores for and extracts crude oil, natural gas, and natural gas liquids. The company has a P/E ratio of 8.55.

The average volume for Royal Dutch Shell has been 949,200 shares per day over the past 30 days. Royal Dutch Shell has a market cap of $212.6 billion and is part of the energy industry. Shares are down 4.7% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Royal Dutch Shell as a buy. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • RDS.B's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.82 is somewhat weak and could be cause for future problems.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 6.5%. Since the same quarter one year prior, revenues slightly dropped by 3.8%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • ROYAL DUTCH SHELL PLC 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, ROYAL DUTCH SHELL PLC reported lower earnings of $8.50 versus $9.94 in the prior year. This year, the market expects an improvement in earnings ($15.12 versus $8.50).
  • The gross profit margin for ROYAL DUTCH SHELL PLC is currently extremely low, coming in at 14.88%. Regardless of RDS.B's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.54% 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.

Omega Healthcare Investors

Dividend Yield: 6.60%

Omega Healthcare Investors (NYSE: OHI) shares currently have a dividend yield of 6.60%.

Omega Healthcare Investors, Inc. operates as a real estate investment trust (REIT) in the United States. The company invests in healthcare facilities, principally long-term healthcare facilities in the United States. The company has a P/E ratio of 21.11.

The average volume for Omega Healthcare Investors has been 1,409,100 shares per day over the past 30 days. Omega Healthcare Investors has a market cap of $3.3 billion and is part of the real estate industry. Shares are up 18.6% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates Omega Healthcare Investors as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, expanding profit margins, good cash flow from operations and impressive record of earnings per share growth. 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:
  • The revenue growth came in higher than the industry average of 10.8%. Since the same quarter one year prior, revenues rose by 22.3%. Growth in the company's revenue appears to have helped boost 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 Real Estate Investment Trusts (REITs) industry and the overall market, OMEGA HEALTHCARE INVS INC's return on equity exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for OMEGA HEALTHCARE INVS INC is rather high; currently it is at 63.15%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 47.84% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $63.73 million or 41.99% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 5.35%.
  • OMEGA HEALTHCARE INVS INC has improved earnings per share by 44.8% 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, OMEGA HEALTHCARE INVS INC increased its bottom line by earning $1.11 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus $1.11).

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

MarkWest Energy Partners

Dividend Yield: 4.90%

MarkWest Energy Partners (NYSE: MWE) shares currently have a dividend yield of 4.90%.

MarkWest's operations are diversified both geographically and by activity. MarkWest's Southwest Business Unit consists of gathering and processing natural gas primarily in Texas and Oklahoma. The company has a P/E ratio of 142.42.

The average volume for MarkWest Energy Partners has been 814,800 shares per day over the past 30 days. MarkWest Energy Partners has a market cap of $9.8 billion and is part of the energy industry. Shares are up 35.4% year to date as of the close of trading on Tuesday.

TheStreet Ratings rates MarkWest Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, solid stock price performance and largely solid financial position with reasonable debt levels by most measures. 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 significantly increased by 90.73% to $92.55 million when compared to the same quarter last year. In addition, MARKWEST ENERGY PARTNERS LP has also vastly surpassed the industry average cash flow growth rate of -15.85%.
  • The gross profit margin for MARKWEST ENERGY PARTNERS LP is rather high; currently it is at 52.18%. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, MWE's net profit margin of 20.16% significantly outperformed against the industry.
  • Compared to its closing price of one year ago, MWE's share price has jumped by 28.83%, 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 6.5%. Since the same quarter one year prior, revenues slightly dropped by 6.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • MWE's debt-to-equity ratio of 1.00 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. Regardless of the somewhat mixed results with the debt-to-equity ratio, the company's quick ratio of 0.74 is weak.

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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