3 Buy-Rated Dividend Stocks Leading The Pack: MBT, HME, SO

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."

Mobile Telesystems OJSC

Dividend Yield: 4.80%

Mobile Telesystems OJSC (NYSE: MBT) shares currently have a dividend yield of 4.80%.

Mobile TeleSystems OJSC provides a range of mobile and fixed line voice and data telecommunications services in Russia and the CIS. It offers data transfer, broadband, pay-TV, and various value-added services, as well as sells equipment and accessories. The company has a P/E ratio of 18.49.

The average volume for Mobile Telesystems OJSC has been 2,070,700 shares per day over the past 30 days. Mobile Telesystems OJSC has a market cap of $18.8 billion and is part of the telecommunications industry. Shares are down 11.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Mobile Telesystems OJSC as a buy. The company's strengths can be seen in multiple areas, such as its notable return on equity, expanding profit margins, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. 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 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 Wireless Telecommunication Services industry and the overall market, MOBILE TELESYSTEMS OJSC's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • The gross profit margin for MOBILE TELESYSTEMS OJSC is currently very high, coming in at 71.99%. It has increased from the same quarter the previous year. Despite the strong results of the gross profit margin, MBT's net profit margin of 13.35% significantly trails the industry average.
  • Net operating cash flow has slightly increased to $1,239.63 million or 6.04% when compared to the same quarter last year. Despite an increase in cash flow, MOBILE TELESYSTEMS OJSC's average is still marginally south of the industry average growth rate of 7.55%.
  • MOBILE TELESYSTEMS OJSC's earnings per share declined by 11.9% 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, MOBILE TELESYSTEMS OJSC increased its bottom line by earning $2.34 versus $1.04 in the prior year. This year, the market expects an improvement in earnings ($68.02 versus $2.34).
  • MBT, with its decline in revenue, underperformed when compared the industry average of 4.0%. Since the same quarter one year prior, revenues slightly dropped by 8.3%. The declining revenue appears to have seeped down to the company's bottom line, decreasing 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.

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