Buy-Rated Dividend Stocks In The Top 4: TLLP, PAA, KMI, PBCT

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."

Tesoro Logistics

Dividend Yield: 4.30%

Tesoro Logistics (NYSE: TLLP) shares currently have a dividend yield of 4.30%.

Tesoro Logistics LP engages in the ownership, operation, development, and acquisition of logistics assets related to crude oil and refined products in the United States. The company operates in two segments, Crude Oil Gathering; and Terminalling, Transportation, and Storage. The company has a P/E ratio of 31.14.

The average volume for Tesoro Logistics has been 443,100 shares per day over the past 30 days. Tesoro Logistics has a market cap of $1.7 billion and is part of the energy industry. Shares are up 0.8% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Tesoro Logistics as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company is trading at a premium valuation based on our review of its current price compared to such things as earnings and book value.

Highlights from the ratings report include:
  • TLLP's very impressive revenue growth greatly exceeded the industry average of 5.7%. Since the same quarter one year prior, revenues leaped by 113.3%. 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.
  • In comparison to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, TESORO LOGISTICS LP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • 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 27.3% when compared to the same quarter one year prior, rising from $16.54 million to $21.05 million.
  • Net operating cash flow has significantly increased by 51.45% to $37.40 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 2.58%.
  • The gross profit margin for TESORO LOGISTICS LP is rather high; currently it is at 57.51%. Regardless of TLLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, TLLP's net profit margin of 22.45% significantly outperformed against the industry.

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: 4.90%

Plains All American Pipeline (NYSE: PAA) shares currently have a dividend yield of 4.90%.

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 17.31.

The average volume for Plains All American Pipeline has been 1,093,900 shares per day over the past 30 days. Plains All American Pipeline has a market cap of $18.2 billion and is part of the energy industry. Shares are down 4.6% year-to-date as of the close of trading on Wednesday.

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, compelling growth in net income, reasonable valuation levels, notable return on equity 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:
  • The revenue growth came in higher than the industry average of 5.7%. Since the same quarter one year prior, revenues rose by 14.4%. 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 40.0% when compared to the same quarter one year prior, rising from $165.00 million to $231.00 million.
  • 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 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.
  • PLAINS ALL AMER PIPELNE -LP has improved earnings per share by 40.7% 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, 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).

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

Kinder Morgan

Dividend Yield: 4.60%

Kinder Morgan (NYSE: KMI) shares currently have a dividend yield of 4.60%.

Kinder Morgan, Inc. owns and operates energy transportation and storage assets in the United States and Canada. The company operates in six segments: Natural Gas Pipelines, Products Pipelines KMP, CO2 KMP, Terminals KMP, Kinder Morgan Canada KMP, and Other. The company has a P/E ratio of 31.21.

The average volume for Kinder Morgan has been 5,511,900 shares per day over the past 30 days. Kinder Morgan has a market cap of $37.2 billion and is part of the energy industry. Shares are down 5.3% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates Kinder Morgan as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, growth in earnings per share, expanding profit margins and notable return on equity. 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 25.8%. 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 53.6% when compared to the same quarter one year prior, rising from $220.00 million to $338.00 million.
  • KINDER MORGAN INC 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, KINDER MORGAN INC reported lower earnings of $1.15 versus $1.22 in the prior year. This year, the market expects an improvement in earnings ($1.43 versus $1.15).
  • 42.33% is the gross profit margin for KINDER MORGAN INC which we consider to be strong. Regardless of KMI's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, KMI's net profit margin of 8.72% compares favorably to the industry average.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, KINDER MORGAN INC's return on equity is significantly below that of the industry average and is below 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.

People's United Financial

Dividend Yield: 4.50%

People's United Financial (NASDAQ: PBCT) shares currently have a dividend yield of 4.50%.

People's United Financial, Inc. operates as the bank holding company for People's United Bank that provides commercial banking, retail and business banking, and wealth management services to individual, corporate, and municipal customers. The company has a P/E ratio of 18.96.

The average volume for People's United Financial has been 3,806,300 shares per day over the past 30 days. People's United Financial has a market cap of $4.6 billion and is part of the banking industry. Shares are down 5.1% year-to-date as of the close of trading on Wednesday.

TheStreet Ratings rates People's United Financial as a buy. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, reasonable valuation levels, 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:
  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. 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.
  • PEOPLE'S UNITED FINL INC has improved earnings per share by 5.5% 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, PEOPLE'S UNITED FINL INC increased its bottom line by earning $0.74 versus $0.72 in the prior year. This year, the market expects an improvement in earnings ($0.85 versus $0.74).
  • The gross profit margin for PEOPLE'S UNITED FINL INC is currently very high, coming in at 88.46%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, PBCT's net profit margin of 17.77% significantly trails the industry average.
  • The revenue fell significantly faster than the industry average of 102.5%. Since the same quarter one year prior, revenues slightly dropped by 0.8%. 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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