3 Buy-Rated Dividend Stocks To Check Out: APU, EPR, RRD

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."

AmeriGas Partners

Dividend Yield: 7.70%

AmeriGas Partners (NYSE: APU) shares currently have a dividend yield of 7.70%.

AmeriGas Partners, L.P. operates as a retail and wholesale distributor of propane gas, and related equipment and supplies in the United States. The company has a P/E ratio of 18.54.

The average volume for AmeriGas Partners has been 322,700 shares per day over the past 30 days. AmeriGas Partners has a market cap of $4.3 billion and is part of the utilities industry. Shares are up 3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates AmeriGas Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, good cash flow from operations, 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:
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 5.4%. 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.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Gas Utilities industry and the overall market, AMERIGAS PARTNERS -LP's return on equity exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has significantly increased by 242.29% to $195.89 million when compared to the same quarter last year. In addition, AMERIGAS PARTNERS -LP has also vastly surpassed the industry average cash flow growth rate of 27.60%.
  • AMERIGAS PARTNERS -LP's earnings per share declined by 9.3% 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, AMERIGAS PARTNERS -LP turned its bottom line around by earning $1.43 versus -$0.05 in the prior year. This year, the market expects an improvement in earnings ($2.95 versus $1.43).
  • 43.77% is the gross profit margin for AMERIGAS PARTNERS -LP which we consider to be strong. Regardless of APU's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, APU's net profit margin of -6.15% significantly underperformed when compared to the industry average.

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