Buy These Top 3 Buy-Rated Dividend Stocks Today: ARLP, SJI, TCRD

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."

Alliance Resource Partners

Dividend Yield: 9.00%

Alliance Resource Partners (NASDAQ: ARLP) shares currently have a dividend yield of 9.00%.

Alliance Resource Partners, L.P. produces and markets coal primarily to utilities and industrial users in the United States. It operates through the Illinois Basin, Appalachia, White Oak, and Other and Corporate segments. The company has a P/E ratio of 6.41.

The average volume for Alliance Resource Partners has been 243,700 shares per day over the past 30 days. Alliance Resource Partners has a market cap of $2.2 billion and is part of the metals & mining industry. Shares are down 30.9% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates Alliance Resource Partners as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, attractive valuation levels, good cash flow from operations and 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:
  • The revenue growth greatly exceeded the industry average of 38.5%. Since the same quarter one year prior, revenues slightly increased by 3.4%. 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.
  • 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 Oil, Gas & Consumable Fuels industry and the overall market, ALLIANCE RESOURCE PTNRS -LP's return on equity significantly exceeds that of both the industry average and the S&P 500.
  • Net operating cash flow has increased to $161.62 million or 15.36% when compared to the same quarter last year. In addition, ALLIANCE RESOURCE PTNRS -LP has also vastly surpassed the industry average cash flow growth rate of -53.34%.
  • 39.00% is the gross profit margin for ALLIANCE RESOURCE PTNRS -LP which we consider to be strong. Regardless of ARLP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, ARLP's net profit margin of 18.99% significantly outperformed against the industry.

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South Jersey Industries

Dividend Yield: 7.70%

South Jersey Industries (NYSE: SJI) shares currently have a dividend yield of 7.70%.

South Jersey Industries, Inc., through its subsidiaries, provides energy related products and services. It engages in the purchase, transmission, and sale of natural gas. The company has a P/E ratio of 17.40.

The average volume for South Jersey Industries has been 305,900 shares per day over the past 30 days. South Jersey Industries has a market cap of $1.8 billion and is part of the utilities industry. Shares are down 10.3% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates South Jersey Industries as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income and notable return on equity. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the ratings report include:
  • The revenue growth came in higher than the industry average of 20.4%. Since the same quarter one year prior, revenues slightly increased by 9.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • SOUTH JERSEY INDUSTRIES INC has improved earnings per share by 6.8% 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 year. We feel that this trend should continue. During the past fiscal year, SOUTH JERSEY INDUSTRIES INC increased its bottom line by earning $1.47 versus $1.29 in the prior year. This year, the market expects an improvement in earnings ($1.69 versus $1.47).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Gas Utilities industry. The net income increased by 11.9% when compared to the same quarter one year prior, going from $47.90 million to $53.58 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 Gas Utilities industry and the overall market on the basis of return on equity, SOUTH JERSEY INDUSTRIES INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • The gross profit margin for SOUTH JERSEY INDUSTRIES INC is rather low; currently it is at 24.33%. Regardless of SJI's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, SJI's net profit margin of 13.99% compares favorably to the industry average.

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THL Credit

Dividend Yield: 10.80%

THL Credit (NASDAQ: TCRD) shares currently have a dividend yield of 10.80%.

THL Credit, Inc. is a business development company specializing in direct and fund of fund investments. The fund seeks to invest in debt and equity securities of middle market companies. The company has a P/E ratio of 9.96.

The average volume for THL Credit has been 161,200 shares per day over the past 30 days. THL Credit has a market cap of $425.5 million and is part of the financial services industry. Shares are up 7.8% year-to-date as of the close of trading on Thursday.

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TheStreet Ratings rates THL Credit as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, increase in net income, growth in earnings per share and good cash flow from operations. We feel its strengths outweigh the fact that the company has had somewhat disappointing return on equity.

Highlights from the ratings report include:
  • TCRD's revenue growth has slightly outpaced the industry average of 5.6%. Since the same quarter one year prior, revenues rose by 13.7%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The gross profit margin for THL CREDIT INC is rather high; currently it is at 65.70%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 65.49% significantly outperformed against the industry average.
  • 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 Capital Markets industry average. The net income increased by 41.7% when compared to the same quarter one year prior, rising from $10.98 million to $15.56 million.
  • Net operating cash flow has significantly increased by 159.26% to $49.43 million when compared to the same quarter last year. Despite an increase in cash flow, THL CREDIT INC's cash flow growth rate is still lower than the industry average growth rate of 190.66%.
  • THL CREDIT INC has improved earnings per share by 43.8% 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, THL CREDIT INC reported lower earnings of $1.07 versus $1.45 in the prior year. This year, the market expects an improvement in earnings ($1.39 versus $1.07).

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