3 Buy-Rated Dividend Stocks: SCG, STO, RCI

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."

SCANA

Dividend Yield: 4.20%

SCANA (NYSE: SCG) shares currently have a dividend yield of 4.20%.

SCANA Corporation, through its subsidiaries, is engaged in the generation, transmission, distribution, and sale of electricity to retail and wholesale customers in South Carolina. It owns nuclear, coal, hydro, natural gas and oil, and biomass generating facilities. The company has a P/E ratio of 13.55.

The average volume for SCANA has been 784,100 shares per day over the past 30 days. SCANA has a market cap of $7.2 billion and is part of the utilities industry. Shares are up 7.1% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates SCANA as a buy. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, revenue growth, reasonable valuation levels, notable return on equity and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • SCANA CORP has improved earnings per share by 13.3% 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. We feel that this trend should continue. During the past fiscal year, SCANA CORP increased its bottom line by earning $3.38 versus $3.14 in the prior year. This year, the market expects an improvement in earnings ($3.62 versus $3.38).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.2%. Since the same quarter one year prior, revenues slightly increased by 1.0%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • 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. Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, SCANA CORP has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Multi-Utilities industry average. The net income increased by 11.6% when compared to the same quarter one year prior, going from $86.00 million to $96.00 million.

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Statoil ASA

Dividend Yield: 4.20%

Statoil ASA (NYSE: STO) shares currently have a dividend yield of 4.20%.

Statoil ASA, an integrated energy company, is engaged in the exploration, production, transportation, refining, and marketing of petroleum and petroleum-derived products in Norway and internationally. The company has a P/E ratio of 9.31.

The average volume for Statoil ASA has been 1,396,600 shares per day over the past 30 days. Statoil ASA has a market cap of $89.7 billion and is part of the energy industry. Shares are up 15.9% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Statoil ASA as a buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures, attractive valuation levels and good cash flow from operations. 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:
  • Powered by its strong earnings growth of 163.63% and other important driving factors, this stock has surged by 28.06% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, STO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • 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 175.1% when compared to the same quarter one year prior, rising from $678.28 million to $1,866.09 million.
  • The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.12, which illustrates the ability to avoid short-term cash problems.
  • Net operating cash flow has significantly increased by 153.19% to $2,739.71 million when compared to the same quarter last year. In addition, STATOIL ASA has also vastly surpassed the industry average cash flow growth rate of -6.58%.

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

Rogers Communications

Dividend Yield: 4.20%

Rogers Communications (NYSE: RCI) shares currently have a dividend yield of 4.20%.

Rogers Communications Inc. operates as a communications and media company in Canada. Its Wireless segment provides wireless voice and high-speed data communication services to consumers and businesses under the Rogers, Fido, and Chatr brands; and wireless devices and applications. The company has a P/E ratio of 13.55.

The average volume for Rogers Communications has been 304,200 shares per day over the past 30 days. Rogers Communications has a market cap of $16.0 billion and is part of the telecommunications industry. Shares are down 12.3% year-to-date as of the close of trading on Monday.

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TheStreet Ratings rates Rogers Communications as a buy. The company's strengths can be seen in multiple areas, such as its good cash flow from operations, expanding profit margins, increase in stock price during the past year 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:
  • Net operating cash flow has increased to $1,202.00 million or 13.28% when compared to the same quarter last year. In addition, ROGERS COMMUNICATIONS has also modestly surpassed the industry average cash flow growth rate of 7.55%.
  • Along with the stagnant revenue growth, the company underperformed against the industry average of 4.0%. Since the same quarter one year prior, revenues have remained constant. Even though the company's revenue remained stagnant, the earnings per share decreased.
  • 40.50% is the gross profit margin for ROGERS COMMUNICATIONS which we consider to be strong. RCI has managed to maintain the strong profit margin since the same quarter of last year. Despite the mixed results of the gross profit margin, RCI's net profit margin of 12.60% is significantly lower than the industry average.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Wireless Telecommunication Services industry and the overall market, ROGERS COMMUNICATIONS's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • In its most recent trading session, RCI 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.

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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