3 Buy-Rated Dividend Stocks To Check Out: AI, DMLP, PNNT

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

Arlington Asset Investment

Dividend Yield: 12.80%

Arlington Asset Investment (NYSE: AI) shares currently have a dividend yield of 12.80%.

Arlington Asset Investment Corp., an investment firm, acquires mortgage-related and other assets. The company has a P/E ratio of 1.56.

The average volume for Arlington Asset Investment has been 145,200 shares per day over the past 30 days. Arlington Asset Investment has a market cap of $438.9 million and is part of the real estate industry. Shares are up 31.7% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Arlington Asset Investment as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, expanding profit margins, 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:
  • The revenue growth came in higher than the industry average of 8.8%. Since the same quarter one year prior, revenues rose by 20.7%. 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 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. Compared to other companies in the Capital Markets industry and the overall market, ARLINGTON ASSET INVESTMENT's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for ARLINGTON ASSET INVESTMENT is rather high; currently it is at 66.12%. It has increased significantly from the same period last year. Along with this, the net profit margin of 26.00% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 77.62% to $14.85 million when compared to the same quarter last year. Despite an increase in cash flow of 77.62%, ARLINGTON ASSET INVESTMENT is still growing at a significantly lower rate than the industry average of 269.25%.
  • 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.

Dorchester Minerals L.P

Dividend Yield: 7.20%

Dorchester Minerals L.P (NASDAQ: DMLP) shares currently have a dividend yield of 7.20%.

Dorchester Minerals, L.P. engages in the acquisition, ownership, and administration of producing and nonproducing crude oil and natural gas royalty, net profits, and leasehold interests in 574 counties and parishes in 25 states. The company owns royalty properties and net profits interests. The company has a P/E ratio of 17.97.

The average volume for Dorchester Minerals L.P has been 38,600 shares per day over the past 30 days. Dorchester Minerals L.P has a market cap of $771.8 million and is part of the financial services industry. Shares are up 23.8% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Dorchester Minerals L.P as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, expanding profit margins and good cash flow from operations. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 5.4%. Since the same quarter one year prior, revenues rose by 14.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • DMLP 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. Along with this, the company maintains a quick ratio of 17.75, which clearly demonstrates the ability to cover short-term cash needs.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. When compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, DORCHESTER MINERALS -LP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for DORCHESTER MINERALS -LP is currently very high, coming in at 91.85%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.38% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $14.83 million or 28.47% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 1.10%.

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

Pennant Park Investment Corporation

Dividend Yield: 9.60%

Pennant Park Investment Corporation (NASDAQ: PNNT) shares currently have a dividend yield of 9.60%.

PennantPark Investment Corporation is a publicly listed business development firm specializing in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The company has a P/E ratio of 8.42.

The average volume for Pennant Park Investment Corporation has been 315,500 shares per day over the past 30 days. Pennant Park Investment Corporation has a market cap of $778.6 million and is part of the financial services industry. Shares are up 6.4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Pennant Park Investment Corporation as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, compelling growth in net income, good cash flow from operations and notable return on equity. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 8.8%. Since the same quarter one year prior, revenues slightly increased by 2.1%. 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 PENNANTPARK INVESTMENT CORP is rather high; currently it is at 67.22%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 71.48% significantly outperformed against the industry average.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 27.1% when compared to the same quarter one year prior, rising from $17.69 million to $22.48 million.
  • Net operating cash flow has significantly increased by 171.05% to $29.18 million when compared to the same quarter last year. Despite an increase in cash flow of 171.05%, PENNANTPARK INVESTMENT CORP is still growing at a significantly lower rate than the industry average of 269.25%.
  • 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, PENNANTPARK INVESTMENT 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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