5 Buy-Rated Dividend Stocks: BBEP, SO, RDS.A, CLMT, CXW

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."

BreitBurn Energy Partners

Dividend Yield: 9.70%

BreitBurn Energy Partners (NASDAQ: BBEP) shares currently have a dividend yield of 9.70%.

BreitBurn Energy Partners L.P. engages in the acquisition, exploitation, and development of oil and gas properties in the United States. The company has a P/E ratio of 675.67.

The average volume for BreitBurn Energy Partners has been 1,087,900 shares per day over the past 30 days. BreitBurn Energy Partners has a market cap of $2.0 billion and is part of the energy industry. Shares are up 0.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates BreitBurn Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations, expanding profit margins and impressive record of earnings per share growth. 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:
  • BBEP's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 232.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 65.7% when compared to the same quarter one year prior, rising from -$73.00 million to -$25.01 million.
  • Net operating cash flow has slightly increased to $69.52 million or 5.77% when compared to the same quarter last year. In addition, BREITBURN ENERGY PARTNERS LP has also modestly surpassed the industry average cash flow growth rate of 2.54%.
  • The gross profit margin for BREITBURN ENERGY PARTNERS LP is rather high; currently it is at 52.23%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of -17.44% is in-line with the industry average.
  • BREITBURN ENERGY PARTNERS LP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, BREITBURN ENERGY PARTNERS LP swung to a loss, reporting -$0.60 versus $1.61 in the prior year. This year, the market expects an improvement in earnings ($0.47 versus -$0.60).

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

Southern

Dividend Yield: 4.90%

Southern (NYSE: SO) shares currently have a dividend yield of 4.90%.

The Southern Company, together with its subsidiaries, operates as a public electric utility company. The company has a P/E ratio of 22.64.

The average volume for Southern has been 5,416,600 shares per day over the past 30 days. Southern has a market cap of $36.7 billion and is part of the utilities industry. Shares are up 1.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Southern as a buy. The company's strengths can be seen in multiple areas, such as its 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:
  • Net operating cash flow has slightly increased to $2,464.00 million or 7.73% when compared to the same quarter last year. In addition, SOUTHERN CO has also modestly surpassed the industry average cash flow growth rate of 3.83%.
  • SOUTHERN CO's earnings per share declined by 12.6% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SOUTHERN CO increased its bottom line by earning $2.67 versus $2.55 in the prior year. This year, the market expects an improvement in earnings ($2.68 versus $2.67).
  • 42.28% is the gross profit margin for SOUTHERN CO which we consider to be strong. Regardless of SO's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, SO's net profit margin of 17.32% compares favorably to the industry average.
  • SO, with its decline in revenue, slightly underperformed the industry average of 2.3%. Since the same quarter one year prior, revenues slightly dropped by 0.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.17, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.40 is very low and demonstrates very 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.

Royal Dutch Shell PLC ADR Class A

Dividend Yield: 5.10%

Royal Dutch Shell PLC ADR Class A (NYSE: RDS.A) shares currently have a dividend yield of 5.10%.

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 9.02.

The average volume for Royal Dutch Shell PLC ADR Class A has been 2,404,700 shares per day over the past 30 days. Royal Dutch Shell PLC ADR Class A has a market cap of $225.8 billion and is part of the energy industry. Shares are up 1.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Royal Dutch Shell PLC ADR Class A as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations, largely solid financial position with reasonable debt levels by most measures 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:
  • RDS.A's revenue growth has slightly outpaced the industry average of 5.7%. Since the same quarter one year prior, revenues slightly increased by 3.9%. 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 slightly increased to $10,409.00 million or 9.76% when compared to the same quarter last year. In addition, ROYAL DUTCH SHELL PLC has also modestly surpassed the industry average cash flow growth rate of 2.54%.
  • RDS.A's debt-to-equity ratio is very low at 0.21 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.
  • ROYAL DUTCH SHELL PLC's earnings per share declined by 34.2% 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, 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 ($13.50 versus $8.50).

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

Calumet Specialty Products Partners

Dividend Yield: 9.20%

Calumet Specialty Products Partners (NASDAQ: CLMT) shares currently have a dividend yield of 9.20%.

Calumet Specialty Products Partners, L.P. produces and sells specialty hydrocarbon and fuel products in North America. It operates in two segments, Specialty Products and Fuel Products. The company has a P/E ratio of 35.94.

The average volume for Calumet Specialty Products Partners has been 499,900 shares per day over the past 30 days. Calumet Specialty Products Partners has a market cap of $2.1 billion and is part of the energy industry. Shares are up 15.3% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Calumet Specialty Products Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • The revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 27.6%. 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.
  • CLMT's debt-to-equity ratio of 0.72 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 0.79 is weak.
  • CALUMET SPECIALTY PRODS -LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from 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, CALUMET SPECIALTY PRODS -LP increased its bottom line by earning $3.53 versus $0.89 in the prior year. For the next year, the market is expecting a contraction of 92.5% in earnings ($0.26 versus $3.53).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 182.0% when compared to the same quarter one year ago, falling from $42.42 million to -$34.80 million.
  • The share price of CALUMET SPECIALTY PRODS -LP has not done very well: it is down 10.34% 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. Despite the stock's decline during the last year, it is still somewhat more expensive (in proportion to its earnings over the last year) than most other stocks in its industry. We feel, however, that other strengths this company displays offset this slight negative.

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

Corrections Corporation of America

Dividend Yield: 5.60%

Corrections Corporation of America (NYSE: CXW) shares currently have a dividend yield of 5.60%.

Corrections Corporation of America, together with its subsidiaries, owns and operates privatized correctional and detention facilities in the United States. The company has a P/E ratio of 12.21.

The average volume for Corrections Corporation of America has been 798,200 shares per day over the past 30 days. Corrections Corporation of America has a market cap of $4.0 billion and is part of the real estate industry. Shares are up 7.2% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Corrections Corporation of America as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, compelling growth in net income, 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:
  • CORRECTIONS CORP AMER has improved earnings per share by 7.1% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, CORRECTIONS CORP AMER increased its bottom line by earning $1.56 versus $1.55 in the prior year. This year, the market expects an improvement in earnings ($1.88 versus $1.56).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry average. The net income increased by 22.4% when compared to the same quarter one year prior, going from $42.34 million to $51.84 million.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. In comparison to the other companies in the Real Estate Investment Trusts (REITs) industry and the overall market, CORRECTIONS CORP AMER's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Net operating cash flow has slightly increased to $100.75 million or 8.28% when compared to the same quarter last year. Despite an increase in cash flow, CORRECTIONS CORP AMER's average is still marginally south of the industry average growth rate of 8.60%.
  • CXW, with its decline in revenue, underperformed when compared the industry average of 9.6%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

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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