Buy These Top 3 Buy-Rated Dividend Stocks Today: ETP, PSEC, EPB

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."

Energy Transfer Partners

Dividend Yield: 6.60%

Energy Transfer Partners (NYSE: ETP) shares currently have a dividend yield of 6.60%.

Energy Transfer Partners, L.P. is engaged in the natural gas midstream, and intrastate transportation and storage businesses in the United States.

The average volume for Energy Transfer Partners has been 1,132,000 shares per day over the past 30 days. Energy Transfer Partners has a market cap of $18.1 billion and is part of the energy industry. Shares are down 0.9% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Energy Transfer Partners 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, increase in stock price during the past year 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 3.2%. Since the same quarter one year prior, revenues rose by 12.7%. 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 Oil, Gas & Consumable Fuels industry. The net income increased by 28.9% when compared to the same quarter one year prior, rising from $322.00 million to $415.00 million.
  • Net operating cash flow has significantly increased by 93.20% to $682.00 million when compared to the same quarter last year. In addition, ENERGY TRANSFER PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of 17.51%.
  • 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. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
  • ENERGY TRANSFER PARTNERS -LP has improved earnings per share by 15.0% 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, 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 ($2.64 versus -$0.24).

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

Prospect Capital Corporation

Dividend Yield: 12.40%

Prospect Capital Corporation (NASDAQ: PSEC) shares currently have a dividend yield of 12.40%.

Prospect Capital Corporation is a business development company. The company has a P/E ratio of 8.75.

The average volume for Prospect Capital Corporation has been 6,237,800 shares per day over the past 30 days. Prospect Capital Corporation has a market cap of $3.7 billion and is part of the financial services industry. Shares are down 5.4% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates Prospect Capital Corporation 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, impressive record of earnings per share growth and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • PSEC's very impressive revenue growth greatly exceeded the industry average of 5.1%. Since the same quarter one year prior, revenues leaped by 58.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The gross profit margin for PROSPECT CAPITAL CORP is rather high; currently it is at 68.45%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 43.13% significantly outperformed against the industry average.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 84.8% when compared to the same quarter one year prior, rising from $44.43 million to $82.10 million.
  • PROSPECT CAPITAL CORP has improved earnings per share by 30.0% 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, PROSPECT CAPITAL CORP reported lower earnings of $1.07 versus $1.69 in the prior year. This year, the market expects an improvement in earnings ($1.27 versus $1.07).
  • 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. When compared to other companies in the Capital Markets industry and the overall market, PROSPECT CAPITAL CORP's return on equity is below that of both the industry average and 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.

El Paso Pipeline Partners

Dividend Yield: 7.30%

El Paso Pipeline Partners (NYSE: EPB) shares currently have a dividend yield of 7.30%.

El Paso Pipeline Partners, L.P. owns and operates interstate natural gas transportation and terminaling facilities in the United States. The company has a P/E ratio of 20.44.

The average volume for El Paso Pipeline Partners has been 787,100 shares per day over the past 30 days. El Paso Pipeline Partners has a market cap of $7.8 billion and is part of the energy industry. Shares are down 0.5% year-to-date as of the close of trading on Thursday.

TheStreet Ratings rates El Paso Pipeline Partners as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and notable return on equity. We feel these strengths outweigh the fact that the company has had somewhat weak growth in earnings per share.

Highlights from the ratings report include:
  • The gross profit margin for EL PASO PIPELINE PARTNERS LP is currently very high, coming in at 82.46%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 45.28% significantly outperformed against 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 other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, EL PASO PIPELINE PARTNERS LP has underperformed in comparison with the industry average, but has greatly exceeded that of the S&P 500.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 3.2%. Since the same quarter one year prior, revenues slightly dropped by 1.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The change in net income from the same quarter one year ago has significantly 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 0.6% when compared to the same quarter one year ago, dropping from $174.00 million to $173.00 million.
  • Reflecting the weaknesses we have cited, including the decline in the company's earnings per share, EPB has underperformed the S&P 500 Index, declining 19.21% from its price level of one year ago. Turning toward the future, the fact that the stock has come down in price over the past year should not necessarily be interpreted as a negative; it is one of the factors that makes this stock an attractive investment.

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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