3 Buy-Rated Dividend Stocks Leading The Pack: HIMX, DUK, SE

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."

Himax Technologies

Dividend Yield: 4.20%

Himax Technologies (NASDAQ: HIMX) shares currently have a dividend yield of 4.20%.

Himax Technologies, Inc., a fabless semiconductor company, provides display imaging processing technologies to consumer electronics worldwide. The company operates through Driver IC and Non-Driver Products segments. The company has a P/E ratio of 19.81.

The average volume for Himax Technologies has been 2,528,200 shares per day over the past 30 days. Himax Technologies has a market cap of $1.2 billion and is part of the electronics industry. Shares are down 11.5% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Himax Technologies as a buy. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and solid stock price performance. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the ratings report include:
  • HIMX's debt-to-equity ratio is very low at 0.27 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, HIMX has a quick ratio of 1.53, which demonstrates the ability of the company to cover short-term liquidity needs.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • HIMX, with its decline in revenue, slightly underperformed the industry average of 0.6%. Since the same quarter one year prior, revenues slightly dropped by 8.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • HIMAX TECHNOLOGIES INC's earnings per share declined by 22.2% 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, HIMAX TECHNOLOGIES INC increased its bottom line by earning $0.39 versus $0.35 in the prior year. For the next year, the market is expecting a contraction of 24.9% in earnings ($0.29 versus $0.39).

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Duke Energy Corporation

Dividend Yield: 4.40%

Duke Energy Corporation (NYSE: DUK) shares currently have a dividend yield of 4.40%.

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States and Latin America. It operates through three segments: Regulated Utilities, International Energy, and Commercial Power. The company has a P/E ratio of 20.70.

The average volume for Duke Energy Corporation has been 3,528,900 shares per day over the past 30 days. Duke Energy Corporation has a market cap of $50.1 billion and is part of the utilities industry. Shares are down 13.7% year-to-date as of the close of trading on Tuesday.

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TheStreet Ratings rates Duke Energy Corporation as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. 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 net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 990.7% when compared to the same quarter one year prior, rising from -$97.00 million to $864.00 million.
  • 37.16% is the gross profit margin for DUKE 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 14.24% is above that of the industry average.
  • Net operating cash flow has slightly increased to $1,440.00 million or 4.87% when compared to the same quarter last year. Despite an increase in cash flow, DUKE ENERGY CORP's average is still marginally south of the industry average growth rate of 11.84%.
  • After a year of stock price fluctuations, the net result is that DUK's price has not changed very much. Although its weak earnings growth may have played a role in this flat result, don't lose sight of the fact that the performance of the overall market, as measured by the S&P 500 Index, was essentially similar. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • DUKE ENERGY CORP's earnings per share improvement from the most recent quarter was slightly positive. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, DUKE ENERGY CORP increased its bottom line by earning $4.65 versus $3.63 in the prior year. This year, the market expects earnings to be in line with last year ($4.65 versus $4.65).

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Spectra Energy

Dividend Yield: 4.40%

Spectra Energy (NYSE: SE) shares currently have a dividend yield of 4.40%.

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 24.33.

The average volume for Spectra Energy has been 3,513,500 shares per day over the past 30 days. Spectra Energy has a market cap of $22.7 billion and is part of the energy industry. Shares are down 6.8% 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% is above that of 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 -53.19%.
  • Despite the weak revenue results, SE has outperformed against the industry average of 38.5%. 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 25.8% in earnings ($1.20 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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