3 Buy-Rated Dividend Stocks To Check Out: HIHO, GAIN, EXLP

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

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."

Highway Holdings

Dividend Yield: 12.00%

Highway Holdings (NASDAQ: HIHO) shares currently have a dividend yield of 12.00%.

Highway Holdings Limited, through its subsidiaries, manufactures and sells metal, plastic, electric, and electronic components, subassemblies, and finished products for original equipment manufacturers (OEM) and contract manufacturers. The company has a P/E ratio of 20.79.

The average volume for Highway Holdings has been 24,100 shares per day over the past 30 days. Highway Holdings has a market cap of $12.6 million and is part of the industrial industry. Shares are up 18.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Highway Holdings as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, impressive record of earnings per share growth and compelling growth in net income. We feel these strengths outweigh the fact that the company shows low profit margins.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 10.3%. Since the same quarter one year prior, revenues slightly increased by 3.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • HIHO has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 3.05, which clearly demonstrates the ability to cover short-term cash needs.
  • Powered by its strong earnings growth of 150.00% and other important driving factors, this stock has surged by 32.07% 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, HIHO should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • HIGHWAY HOLDINGS LTD reported significant earnings per share improvement 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. During the past fiscal year, HIGHWAY HOLDINGS LTD increased its bottom line by earning $0.16 versus $0.12 in the prior year.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Machinery industry. The net income increased by 143.9% when compared to the same quarter one year prior, rising from $0.15 million to $0.36 million.

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Gladstone Investment Corporation

Dividend Yield: 10.00%

Gladstone Investment Corporation (NASDAQ: GAIN) shares currently have a dividend yield of 10.00%.

Gladstone Investment Corporation is a business development company specializing in buyouts. The company has a P/E ratio of 53.57.

The average volume for Gladstone Investment Corporation has been 156,400 shares per day over the past 30 days. Gladstone Investment Corporation has a market cap of $198.6 million and is part of the financial services industry. Shares are up 7.1% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Gladstone Investment Corporation as a buy. The company's strengths can be seen in multiple areas, such as its 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:
  • The revenue growth came in higher than the industry average of 4.4%. Since the same quarter one year prior, revenues rose by 33.0%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for GLADSTONE INVESTMENT CORP/DE is currently very high, coming in at 72.39%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.63% 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 171.0% when compared to the same quarter one year prior, rising from -$10.69 million to $7.59 million.
  • 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 Capital Markets industry and the overall market on the basis of return on equity, GLADSTONE INVESTMENT CORP/DE has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • GLADSTONE INVESTMENT CORP/DE 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, GLADSTONE INVESTMENT CORP/DE swung to a loss, reporting -$0.06 versus $0.63 in the prior year. This year, the market expects an improvement in earnings ($0.76 versus -$0.06).

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Exterran Partners

Dividend Yield: 8.50%

Exterran Partners (NASDAQ: EXLP) shares currently have a dividend yield of 8.50%.

Exterran Partners, L.P., together with its subsidiaries, provides natural gas contract operations services to customers in the United States. The company has a P/E ratio of 24.40.

The average volume for Exterran Partners has been 190,800 shares per day over the past 30 days. Exterran Partners has a market cap of $1.6 billion and is part of the energy industry. Shares are up 21.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Exterran Partners as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, expanding profit margins, compelling growth in net income and growth in earnings per share. We feel its 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 1.9%. Since the same quarter one year prior, revenues rose by 35.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • 47.45% is the gross profit margin for EXTERRAN PARTNERS LP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 12.22% is above that of 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 Energy Equipment & Services industry. The net income increased by 189.4% when compared to the same quarter one year prior, rising from $6.94 million to $20.09 million.
  • EXTERRAN 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, EXTERRAN PARTNERS LP reported lower earnings of $0.88 versus $1.18 in the prior year. This year, the market expects an improvement in earnings ($1.09 versus $0.88).
  • EXLP has underperformed the S&P 500 Index, declining 11.01% from its price level of one year ago. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.

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