Buy-Rated Dividend Stocks: Top 5 Companies: RYN, BWP, GSK, GAS, LEG

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."

Rayonier

Dividend Yield: 4.40%

Rayonier (NYSE: RYN) shares currently have a dividend yield of 4.40%.

Rayonier, Inc. engages in the sale and development of real estate and timberland management, as well as in the production and sale of cellulose fibers in the United States, New Zealand, and Australia. The company has a P/E ratio of 17.57.

The average volume for Rayonier has been 1,017,900 shares per day over the past 30 days. Rayonier has a market cap of $5.6 billion and is part of the materials & construction industry. Shares are down 15.4% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Rayonier as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • 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. In comparison to the other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, RAYONIER INC's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • 39.19% is the gross profit margin for RAYONIER INC which we consider to be strong. Regardless of RYN'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 14.90% trails the industry average.
  • RAYONIER INC's earnings per share declined by 27.9% 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, RAYONIER INC reported lower earnings of $2.13 versus $2.20 in the prior year. This year, the market expects an improvement in earnings ($2.27 versus $2.13).
  • RYN, with its decline in revenue, slightly underperformed the industry average of 9.5%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The share price of RAYONIER INC has not done very well: it is down 7.55% 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.

Boardwalk Pipeline Partners

Dividend Yield: 8.50%

Boardwalk Pipeline Partners (NYSE: BWP) shares currently have a dividend yield of 8.50%.

Boardwalk Pipeline Partners, LP, through its subsidiaries, engages in the ownership and operation of integrated natural gas and natural gas liquids (NGLs) pipelines, and storage systems in the United States. The company also transports, stores, gathers, and processes natural gas and NGLs. The company has a P/E ratio of 19.60.

The average volume for Boardwalk Pipeline Partners has been 512,900 shares per day over the past 30 days. Boardwalk Pipeline Partners has a market cap of $6.1 billion and is part of the energy industry. Shares are down 2.4% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Boardwalk Pipeline Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in net income, 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 somewhat disappointing return on equity.

Highlights from the ratings report include:
  • BWP's revenue growth has slightly outpaced the industry average of 5.4%. Since the same quarter one year prior, revenues slightly increased by 1.8%. 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 BOARDWALK PIPELINE PRTNRS-LP is rather high; currently it is at 62.40%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.61% significantly outperformed against the industry average.
  • 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 7.0% when compared to the same quarter one year prior, going from $58.20 million to $62.30 million.
  • BWP's debt-to-equity ratio of 0.81 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 0.72 is weak.
  • BOARDWALK PIPELINE PRTNRS-LP's earnings per share declined by 19.2% 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, BOARDWALK PIPELINE PRTNRS-LP increased its bottom line by earning $1.37 versus $1.09 in the prior year. For the next year, the market is expecting a contraction of 13.6% in earnings ($1.18 versus $1.37).

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

GlaxoSmithKline

Dividend Yield: 4.70%

GlaxoSmithKline (NYSE: GSK) shares currently have a dividend yield of 4.70%.

GlaxoSmithKline plc, together with its subsidiaries, discovers, develops, manufactures, and markets pharmaceutical products, over-the-counter medicines, and health-related consumer products worldwide. The company has a P/E ratio of 15.70.

The average volume for GlaxoSmithKline has been 2,534,000 shares per day over the past 30 days. GlaxoSmithKline has a market cap of $126.6 billion and is part of the drugs industry. Shares are up 20.1% year-to-date as of the close of trading on Thursday.

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

Highlights from the ratings report include:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 1.1%. 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 significantly increased by 1166.38% to $3,647.01 million when compared to the same quarter last year. In addition, GLAXOSMITHKLINE PLC has also vastly surpassed the industry average cash flow growth rate of 30.13%.
  • 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.
  • The gross profit margin for GLAXOSMITHKLINE PLC is rather high; currently it is at 68.78%. Regardless of GSK'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 14.80% trails the industry average.
  • GLAXOSMITHKLINE PLC's earnings per share declined by 7.8% 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, GLAXOSMITHKLINE PLC reported lower earnings of $2.94 versus $3.21 in the prior year. This year, the market expects an improvement in earnings ($3.66 versus $2.94).

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

AGL Resources

Dividend Yield: 4.20%

AGL Resources (NYSE: GAS) shares currently have a dividend yield of 4.20%.

AGL Resources Inc., an energy services holding company, distributes natural gas to residential, commercial, industrial, and governmental customers in Illinois, Georgia, Virginia, New Jersey, Florida, Tennessee, and Maryland. The company has a P/E ratio of 13.68.

The average volume for AGL Resources has been 592,000 shares per day over the past 30 days. AGL Resources has a market cap of $5.4 billion and is part of the utilities industry. Shares are up 13.4% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates AGL Resources as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, reasonable valuation levels and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • AGL RESOURCES INC reported significant earnings per share improvement 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, AGL RESOURCES INC increased its bottom line by earning $2.31 versus $2.15 in the prior year. This year, the market expects an improvement in earnings ($2.80 versus $2.31).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 211.1% when compared to the same quarter one year prior, rising from $9.00 million to $28.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 15.1%. Since the same quarter one year prior, revenues slightly increased by 9.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 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.

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

Leggett & Platt

Dividend Yield: 4.10%

Leggett & Platt (NYSE: LEG) shares currently have a dividend yield of 4.10%.

Leggett & Platt, Incorporated designs and produces various engineered components and products worldwide. The company has a P/E ratio of 16.49.

The average volume for Leggett & Platt has been 1,057,000 shares per day over the past 30 days. Leggett & Platt has a market cap of $4.1 billion and is part of the consumer durables industry. Shares are up 7.3% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Leggett & Platt 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, reasonable valuation levels, good cash flow from operations, notable return on equity and increase in stock price during the past year. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The debt-to-equity ratio is somewhat low, currently at 0.66, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.37, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has increased to $115.60 million or 22.06% when compared to the same quarter last year. Despite an increase in cash flow of 22.06%, LEGGETT & PLATT INC is still growing at a significantly lower rate than the industry average of 86.68%.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Household Durables industry and the overall market on the basis of return on equity, LEGGETT & PLATT INC has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.
  • The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. 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.

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