Best 3 Yielding Buy-Rated Stocks: SE, PCL, GEL

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."

Spectra Energy

Dividend Yield: 4.10%

Spectra Energy (NYSE: SE) shares currently have a dividend yield of 4.10%.

Spectra Energy Corp, through its subsidiaries, owns and operates a portfolio of natural gas-related energy assets in North America. The company has a P/E ratio of 26.14.

The average volume for Spectra Energy has been 3,481,200 shares per day over the past 30 days. Spectra Energy has a market cap of $24.4 billion and is part of the energy industry. Shares are down 1.2% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Spectra Energy as a buy. The company's strengths can be seen in multiple areas, such as its expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • 45.78% is the gross profit margin for SPECTRA ENERGY CORP which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.45% significantly outperformed against the industry average.
  • Net operating cash flow has increased to $766.00 million or 11.66% when compared to the same quarter last year. In addition, SPECTRA ENERGY CORP has also vastly surpassed the industry average cash flow growth rate of -53.10%.
  • Despite the weak revenue results, SE has outperformed against the industry average of 38.3%. Since the same quarter one year prior, revenues fell by 11.9%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SPECTRA ENERGY CORP's earnings per share declined by 35.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, SPECTRA ENERGY CORP increased its bottom line by earning $1.61 versus $1.55 in the prior year. For the next year, the market is expecting a contraction of 27.0% in earnings ($1.18 versus $1.61).
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 36.3% when compared to the same quarter one year ago, falling from $419.00 million to $267.00 million.

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Plum Creek Timber

Dividend Yield: 4.20%

Plum Creek Timber (NYSE: PCL) shares currently have a dividend yield of 4.20%.

Plum Creek Timber Company, Inc. is a publicly owned real estate investment trust (REIT). The trust owns and manages timberlands in the United States. Its products include lumber products, plywood, medium density fiberboard, and related by-products, such as wood chips. The company has a P/E ratio of 32.91.

The average volume for Plum Creek Timber has been 884,800 shares per day over the past 30 days. Plum Creek Timber has a market cap of $7.4 billion and is part of the materials & construction industry. Shares are down 1.1% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Plum Creek Timber as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, compelling growth in net income, good cash flow from operations and notable return on equity. We feel its 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 8.4%. Since the same quarter one year prior, revenues rose by 28.1%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Real Estate Investment Trusts (REITs) industry average. The net income increased by 40.0% when compared to the same quarter one year prior, rising from $30.00 million to $42.00 million.
  • Net operating cash flow has significantly increased by 164.91% to $151.00 million when compared to the same quarter last year. In addition, PLUM CREEK TIMBER CO INC has also vastly surpassed the industry average cash flow growth rate of -0.03%.
  • 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 Real Estate Investment Trusts (REITs) industry and the overall market on the basis of return on equity, PLUM CREEK TIMBER CO INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • PLUM CREEK TIMBER CO INC has improved earnings per share by 41.2% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, PLUM CREEK TIMBER CO INC reported lower earnings of $1.21 versus $1.31 in the prior year. For the next year, the market is expecting a contraction of 6.6% in earnings ($1.13 versus $1.21).

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Genesis Energy

Dividend Yield: 5.10%

Genesis Energy (NYSE: GEL) shares currently have a dividend yield of 5.10%.

Genesis Energy, L.P. operates in the midstream segment of the oil and gas industry in the Gulf Coast region of the United States. Its Onshore Pipeline Transportation segment transports crude oil and carbon dioxide (CO2). The company has a P/E ratio of 45.74.

The average volume for Genesis Energy has been 393,400 shares per day over the past 30 days. Genesis Energy has a market cap of $4.8 billion and is part of the energy industry. Shares are up 12.4% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Genesis Energy as a buy. The company's strongest point has been its expanding profit margins. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the ratings report include:
  • GENESIS ENERGY -LP's earnings per share declined by 38.2% 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, GENESIS ENERGY -LP increased its bottom line by earning $1.19 versus $1.00 in the prior year. This year, the market expects an improvement in earnings ($1.34 versus $1.19).
  • GEL, with its decline in revenue, slightly underperformed the industry average of 38.3%. Since the same quarter one year prior, revenues fell by 48.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for GENESIS ENERGY -LP is currently extremely low, coming in at 12.17%. Regardless of GEL's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.83% trails the industry average.
  • Net operating cash flow has decreased to $62.47 million or 41.11% when compared to the same quarter last year. Despite a decrease in cash flow GENESIS ENERGY -LP is still fairing well by exceeding its industry average cash flow growth rate of -53.10%.
  • The change in net income from the same quarter one year ago has exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has significantly decreased by 32.1% when compared to the same quarter one year ago, falling from $29.78 million to $20.22 million.

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