3 Buy-Rated Dividend Stocks: OKS, ALE, MWE

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."

ONEOK Partners

Dividend Yield: 5.40%

ONEOK Partners (NYSE: OKS) shares currently have a dividend yield of 5.40%.

ONEOK Partners, L.P. is engaged in the gathering, processing, storage, and transportation of natural gas in the United States. It operates in three segments: Natural Gas Gathering and Processing, Natural Gas Liquids, and Natural Gas Pipelines. The company has a P/E ratio of 20.19.

The average volume for ONEOK Partners has been 675,900 shares per day over the past 30 days. ONEOK Partners has a market cap of $8.9 billion and is part of the energy industry. Shares are up 5.7% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates ONEOK Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, reasonable valuation levels, good cash flow from operations, increase in net income and growth in earnings per share. 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 3.1%. Since the same quarter one year prior, revenues rose by 25.6%. 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 69.5% when compared to the same quarter one year prior, rising from $156.60 million to $265.39 million.
  • Net operating cash flow has significantly increased by 153.06% to $459.16 million when compared to the same quarter last year. In addition, ONEOK PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of 17.38%.
  • ONEOK 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, ONEOK PARTNERS -LP reported lower earnings of $2.35 versus $3.04 in the prior year. This year, the market expects an improvement in earnings ($2.98 versus $2.35).

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

ALLETE

Dividend Yield: 4.10%

ALLETE (NYSE: ALE) shares currently have a dividend yield of 4.10%.

ALLETE, Inc., together with its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Operations, and Investments and Other segments. The company generates electricity from coal, hydel, wind, and biomass. The company has a P/E ratio of 18.42.

The average volume for ALLETE has been 230,400 shares per day over the past 30 days. ALLETE has a market cap of $2.0 billion and is part of the utilities industry. Shares are down 3.4% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates ALLETE as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations, increase in net income, largely solid financial position with reasonable debt levels by most measures and reasonable valuation levels. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • ALE's revenue growth has slightly outpaced the industry average of 10.5%. Since the same quarter one year prior, revenues rose by 12.4%. 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 increased to $74.90 million or 28.69% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 18.42%.
  • ALLETE INC' earnings per share from the most recent quarter came in slightly below the year earlier quarter. 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, ALLETE INC increased its bottom line by earning $2.63 versus $2.58 in the prior year. This year, the market expects an improvement in earnings ($2.85 versus $2.63).
  • The net income growth from the same quarter one year ago has exceeded that of the Electric Utilities industry average, but is less than that of the S&P 500. The net income increased by 3.1% when compared to the same quarter one year prior, going from $32.50 million to $33.50 million.
  • The debt-to-equity ratio is somewhat low, currently at 0.87, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Despite the fact that ALE's debt-to-equity ratio is low, the quick ratio, which is currently 0.68, displays a potential problem in covering short-term cash needs.

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

MarkWest Energy Partners

Dividend Yield: 5.30%

MarkWest Energy Partners (NYSE: MWE) shares currently have a dividend yield of 5.30%.

MarkWest Energy Partners, L.P. is engaged in the gathering, processing, and transportation of natural gas. The company is also engaged in the gathering, transportation, fractionation, storage, and marketing of natural gas liquids; and the gathering and transportation of crude oil. The company has a P/E ratio of 152.19.

The average volume for MarkWest Energy Partners has been 859,300 shares per day over the past 30 days. MarkWest Energy Partners has a market cap of $10.6 billion and is part of the energy industry. Shares are down 0.1% year-to-date as of the close of trading on Monday.

TheStreet Ratings rates MarkWest Energy Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations, growth in earnings per share 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:
  • The revenue growth greatly exceeded the industry average of 3.1%. Since the same quarter one year prior, revenues rose by 37.3%. 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 180.8% when compared to the same quarter one year prior, rising from -$15.46 million to $12.49 million.
  • Net operating cash flow has increased to $112.37 million or 32.13% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 17.38%.
  • MARKWEST 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, MARKWEST ENERGY PARTNERS LP reported lower earnings of $0.21 versus $1.70 in the prior year. This year, the market expects an improvement in earnings ($0.78 versus $0.21).
  • 43.96% is the gross profit margin for MARKWEST ENERGY PARTNERS LP which we consider to be strong. Regardless of MWE's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.43% 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.

Other helpful dividend tools from TheStreet:

null

More from Markets

Economist Perspective: Rising Wages

Economist Perspective: Rising Wages

'Blockchain Is to Bitcoin as Internet Is to Dot Com Bubble,' Says Zillow CEO

'Blockchain Is to Bitcoin as Internet Is to Dot Com Bubble,' Says Zillow CEO

NAACP Chief Johnson Touts Merits of Diversity, New ETF

NAACP Chief Johnson Touts Merits of Diversity, New ETF

Dow, S&P 500 Jump to Record Highs; Wall Street Looks Past Trade Fears

Dow, S&P 500 Jump to Record Highs; Wall Street Looks Past Trade Fears

Trump's Trade War May Test Investors More Than China's Economy

Trump's Trade War May Test Investors More Than China's Economy