3 Buy-Rated Dividend Stocks Taking The Lead: TAL, WIN, WMB

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 which could 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."

TAL International Group

Dividend Yield: 6.60%

TAL International Group (NYSE: TAL) shares currently have a dividend yield of 6.60%.

TAL International Group, Inc., together with its subsidiaries, leases intermodal transportation equipment and provides maritime container management services worldwide. The company operates in two segments, Equipment Leasing and Equipment Trading. The company has a P/E ratio of 9.81.

The average volume for TAL International Group has been 595,300 shares per day over the past 30 days. TAL International Group has a market cap of $1.5 billion and is part of the diversified services industry. Shares are down 25.4% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates TAL International Group as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 6.4%. Since the same quarter one year prior, revenues slightly increased by 3.0%. 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 gross profit margin for TAL INTERNATIONAL GROUP INC is currently very high, coming in at 89.93%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 21.17% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $108.23 million or 41.33% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 12.08%.
  • In its most recent trading session, TAL has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. 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.
  • TAL INTERNATIONAL GROUP INC's earnings per share declined by 10.1% in the most recent quarter compared to 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, TAL INTERNATIONAL GROUP INC increased its bottom line by earning $4.25 versus $3.87 in the prior year. For the next year, the market is expecting a contraction of 3.8% in earnings ($4.09 versus $4.25).

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

Windstream Holdings

Dividend Yield: 11.70%

Windstream Holdings (NASDAQ: WIN) shares currently have a dividend yield of 11.70%.

Windstream Holdings, Inc. provides communications and technology solutions in the United States. The company offers managed services and cloud computing services to businesses, as well as broadband, voice, and video services to consumers primarily in rural markets. The company has a P/E ratio of 21.46.

The average volume for Windstream Holdings has been 9,140,100 shares per day over the past 30 days. Windstream Holdings has a market cap of $5.1 billion and is part of the telecommunications industry. Shares are up 7.5% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Windstream Holdings as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, notable return on equity, 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:
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Diversified Telecommunication Services industry. The net income increased by 1084.0% when compared to the same quarter one year prior, rising from $10.00 million to $118.40 million.
  • 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 Diversified Telecommunication Services industry and the overall market, WINDSTREAM HOLDINGS INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for WINDSTREAM HOLDINGS INC is rather high; currently it is at 59.42%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of 7.93% trails the industry average.
  • WINDSTREAM HOLDINGS INC 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 two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, WINDSTREAM HOLDINGS INC increased its bottom line by earning $0.39 versus $0.29 in the prior year. For the next year, the market is expecting a contraction of 2.6% in earnings ($0.38 versus $0.39).
  • WIN, with its decline in revenue, slightly underperformed the industry average of 1.1%. Since the same quarter one year prior, revenues slightly dropped by 3.0%. 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.

Williams Companies

Dividend Yield: 4.10%

Williams Companies (NYSE: WMB) shares currently have a dividend yield of 4.10%.

The Williams Companies, Inc. operates as an energy infrastructure company. The company has a P/E ratio of 64.98.

The average volume for Williams Companies has been 6,904,900 shares per day over the past 30 days. Williams Companies has a market cap of $27.1 billion and is part of the energy industry. Shares are up 5.2% year-to-date as of the close of trading on Tuesday.

TheStreet Ratings rates Williams Companies as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins 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:
  • 39.82% is the gross profit margin for WILLIAMS COS INC which we consider to be strong. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -0.84% trails the industry average.
  • WILLIAMS COS INC 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 COS INC reported lower earnings of $0.64 versus $1.16 in the prior year. This year, the market expects an improvement in earnings ($1.12 versus $0.64).
  • WMB, with its decline in revenue, slightly underperformed the industry average of 7.8%. Since the same quarter one year prior, revenues fell by 11.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing 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. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
  • Net operating cash flow has declined marginally to $515.00 million or 5.67% when compared to the same quarter last year. Despite a decrease in cash flow WILLIAMS COS INC is still fairing well by exceeding its industry average cash flow growth rate of -23.34%.

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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