Best 4 Yielding Buy-Rated Stocks: ED, BPL, PCL, CIM

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."

Consolidated Edison

Dividend Yield: 4.70%

Consolidated Edison (NYSE: ED) shares currently have a dividend yield of 4.70%.

Consolidated Edison, Inc., through its subsidiaries, engages in regulated electric, gas, and steam delivery businesses. The company has a P/E ratio of 15.17.

The average volume for Consolidated Edison has been 2,111,900 shares per day over the past 30 days. Consolidated Edison has a market cap of $15.6 billion and is part of the utilities industry. Shares are down 2.5% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Consolidated Edison as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • ED's revenue growth has slightly outpaced the industry average of 0.3%. Since the same quarter one year prior, revenues slightly increased by 1.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • CONSOLIDATED EDISON INC has improved earnings per share by 6.0% 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. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, CONSOLIDATED EDISON INC increased its bottom line by earning $3.86 versus $3.57 in the prior year. For the next year, the market is expecting a contraction of 2.8% in earnings ($3.75 versus $3.86).
  • The company, on the basis of net income growth from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and the Multi-Utilities industry average. The net income increased by 5.5% when compared to the same quarter one year prior, going from $440.00 million to $464.00 million.
  • The gross profit margin for CONSOLIDATED EDISON INC is currently lower than what is desirable, coming in at 31.95%. Regardless of ED'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 13.31% 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.

Buckeye Partners L.P

Dividend Yield: 5.90%

Buckeye Partners L.P (NYSE: BPL) shares currently have a dividend yield of 5.90%.

Buckeye Partners, L.P. owns and operates refined petroleum products pipeline systems in the United States. Its Pipelines & Terminals segment transports refined petroleum products; and provides bulk storage and terminal throughput services in the continental United States. The company has a P/E ratio of 27.32.

The average volume for Buckeye Partners L.P has been 331,800 shares per day over the past 30 days. Buckeye Partners L.P has a market cap of $8.3 billion and is part of the energy industry. Shares are up 1.9% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Buckeye Partners L.P as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth and solid stock price performance. 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 12.7%. 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.
  • Compared to its closing price of one year ago, BPL's share price has jumped by 33.46%, 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.
  • BUCKEYE PARTNERS LP's earnings per share declined by 17.2% 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, BUCKEYE PARTNERS LP increased its bottom line by earning $2.31 versus $1.25 in the prior year. This year, the market expects an improvement in earnings ($3.19 versus $2.31).
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 9.2% when compared to the same quarter one year ago, dropping from $85.12 million to $77.25 million.
  • The gross profit margin for BUCKEYE PARTNERS LP is rather low; currently it is at 15.46%. It has decreased from the same quarter the previous year. Regardless of the weak results of the gross profit margin, the net profit margin of 7.09% is above that of 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.

Plum Creek Timber

Dividend Yield: 4.10%

Plum Creek Timber (NYSE: PCL) shares currently have a dividend yield of 4.10%.

Plum Creek Timber Company, Inc. is a publicly owned real estate investment trust (REIT). The trust owns and manages timberlands in the United States. Its products include lumber products, plywood, medium density fiberboard, and related by-products, such as wood chips. The company has a P/E ratio of 31.05.

The average volume for Plum Creek Timber has been 1,216,700 shares per day over the past 30 days. Plum Creek Timber has a market cap of $7.6 billion and is part of the materials & construction industry. Shares are down 7.5% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Plum Creek Timber 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, notable return on equity and good cash flow from operations. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • PLUM CREEK TIMBER CO INC has improved earnings per share by 22.2% 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, PLUM CREEK TIMBER CO INC increased its bottom line by earning $1.25 versus $1.19 in the prior year. This year, the market expects an improvement in earnings ($1.36 versus $1.25).
  • 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 22.0% when compared to the same quarter one year prior, going from $59.00 million to $72.00 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.6%. Since the same quarter one year prior, revenues slightly increased by 3.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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, PLUM CREEK TIMBER CO INC'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 increased to $180.00 million or 21.62% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 8.45%.

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

Chimera Investment Corporation

Dividend Yield: 11.50%

Chimera Investment Corporation (NYSE: CIM) shares currently have a dividend yield of 11.50%.

Chimera Investment Corporation operates as a real estate investment trust (REIT) in the United States. The company has a P/E ratio of 9.78.

The average volume for Chimera Investment Corporation has been 7,990,000 shares per day over the past 30 days. Chimera Investment Corporation has a market cap of $3.2 billion and is part of the real estate industry. Shares are up 1.3% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Chimera Investment Corporation 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, attractive valuation levels, expanding profit margins 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:
  • CHIMERA INVESTMENT CORP 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, CHIMERA INVESTMENT CORP increased its bottom line by earning $0.32 versus $0.13 in the prior year. This year, the market expects an improvement in earnings ($0.40 versus $0.32).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Real Estate Investment Trusts (REITs) industry. The net income increased by 84.1% when compared to the same quarter one year prior, rising from $42.75 million to $78.69 million.
  • The gross profit margin for CHIMERA INVESTMENT CORP is currently very high, coming in at 89.95%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 58.91% significantly outperformed against the industry average.
  • 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.

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