Buy-Rated Dividend Stocks In The Top 3: ETP, CLNY, WPZ

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."

Energy Transfer Partners L.P

Dividend Yield: 6.80%

Energy Transfer Partners L.P (NYSE: ETP) shares currently have a dividend yield of 6.80%.

Energy Transfer Partners, L.P. engages in the natural gas midstream, and intrastate transportation and storage businesses in the United States. The company has a P/E ratio of 162.85.

The average volume for Energy Transfer Partners L.P has been 931,300 shares per day over the past 30 days. Energy Transfer Partners L.P has a market cap of $20.4 billion and is part of the energy industry. Shares are down 6.3% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Energy Transfer Partners L.P as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth 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 3.3%. Since the same quarter one year prior, revenues slightly increased by 9.6%. 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.
  • 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.
  • ENERGY TRANSFER PARTNERS -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. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, ENERGY TRANSFER PARTNERS -LP swung to a loss, reporting -$0.24 versus $5.76 in the prior year. This year, the market expects an improvement in earnings ($2.66 versus -$0.24).
  • 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 276.2% when compared to the same quarter one year ago, falling from $307.00 million to -$541.00 million.
  • The debt-to-equity ratio of 1.43 is relatively high when compared with the industry average, suggesting a need for better debt level management.

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

Colony Financial

Dividend Yield: 6.10%

Colony Financial (NYSE: CLNY) shares currently have a dividend yield of 6.10%.

Colony Financial, Inc. operates as a real estate investment and finance company in the United States. The company has a P/E ratio of 16.10.

The average volume for Colony Financial has been 779,100 shares per day over the past 30 days. Colony Financial has a market cap of $1.8 billion and is part of the real estate industry. Shares are up 14.6% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Colony Financial as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, expanding profit margins, increase in stock price during the past year and growth in earnings per share. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:
  • CLNY's very impressive revenue growth greatly exceeded the industry average of 6.8%. Since the same quarter one year prior, revenues leaped by 78.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving 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 Real Estate Investment Trusts (REITs) industry. The net income increased by 60.2% when compared to the same quarter one year prior, rising from $18.88 million to $30.26 million.
  • The gross profit margin for COLONY FINANCIAL INC is currently very high, coming in at 78.13%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 51.79% significantly outperformed against the industry average.
  • 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.
  • COLONY FINANCIAL INC has improved earnings per share by 9.7% 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, COLONY FINANCIAL INC reported lower earnings of $1.19 versus $1.34 in the prior year. This year, the market expects an improvement in earnings ($1.80 versus $1.19).

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

Williams Partners

Dividend Yield: 7.40%

Williams Partners (NYSE: WPZ) shares currently have a dividend yield of 7.40%.

Williams Partners L.P., an energy infrastructure company, focuses on connecting North America's hydrocarbon resource plays to growing markets for natural gas and natural gas liquids (NGL). It operates in two segments, Gas Pipeline and Midstream Gas & Liquids. The company has a P/E ratio of 33.42.

The average volume for Williams Partners has been 675,000 shares per day over the past 30 days. Williams Partners has a market cap of $21.3 billion and is part of the chemicals industry. Shares are down 3.9% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates Williams Partners as a buy. Among the primary strengths of the company is its expanding profit margins over time. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • 39.54% is the gross profit margin for WILLIAMS PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 13.05% is above that of the industry average.
  • WILLIAMS PARTNERS 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. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, WILLIAMS PARTNERS LP reported lower earnings of $1.45 versus $1.94 in the prior year. This year, the market expects an improvement in earnings ($2.17 versus $1.45).
  • WPZ, with its decline in revenue, slightly underperformed the industry average of 3.3%. Since the same quarter one year prior, revenues fell by 11.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 significantly decreased by 27.5% when compared to the same quarter one year ago, falling from $291.00 million to $211.00 million.
  • The share price of WILLIAMS PARTNERS LP has not done very well: it is down 9.24% 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 decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.

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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