Buy-Rated Dividend Stocks In The Top 3: SFL, NS, 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."

Ship Finance International

Dividend Yield: 9.90%

Ship Finance International (NYSE: SFL) shares currently have a dividend yield of 9.90%.

Ship Finance International Limited owns and operates vessels and offshore related assets in Bermuda, Cyprus, Malta, Liberia, Norway, Singapore, the United Kingdom, and the Marshall Islands. It is also involved in the charter, purchase, and sale of assets. The company has a P/E ratio of 17.52.

The average volume for Ship Finance International has been 606,000 shares per day over the past 30 days. Ship Finance International has a market cap of $1.6 billion and is part of the transportation industry. Shares are up 23.1% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates Ship Finance International as a buy. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations 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 greatly exceeded the industry average of 38.5%. Since the same quarter one year prior, revenues slightly increased by 9.0%. 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 gross profit margin for SHIP FINANCE INTL LTD is rather high; currently it is at 69.52%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 36.75% significantly outperformed against the industry average.
  • Net operating cash flow has significantly increased by 76.97% to $65.59 million when compared to the same quarter last year. In addition, SHIP FINANCE INTL LTD has also vastly surpassed the industry average cash flow growth rate of -53.19%.
  • SHIP FINANCE INTL LTD's earnings per share declined by 12.5% 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, SHIP FINANCE INTL LTD increased its bottom line by earning $1.25 versus $1.01 in the prior year. This year, the market expects an improvement in earnings ($1.58 versus $1.25).
  • The change in net income from the same quarter one year ago has significantly exceeded that of the Oil, Gas & Consumable Fuels industry average, but is less than that of the S&P 500. The net income has decreased by 18.7% when compared to the same quarter one year ago, dropping from $40.73 million to $33.11 million.

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NuStar Energy L.P

Dividend Yield: 7.10%

NuStar Energy L.P (NYSE: NS) shares currently have a dividend yield of 7.10%.

NuStar Energy L.P. engages in the terminalling, storage, and marketing of petroleum products; and transportation of petroleum products and anhydrous ammonia primarily in the United States and the Netherlands. It operates through three segments: Pipeline, Storage, and Fuels Marketing. The company has a P/E ratio of 18.91.

The average volume for NuStar Energy L.P has been 245,200 shares per day over the past 30 days. NuStar Energy L.P has a market cap of $4.8 billion and is part of the energy industry. Shares are up 5.6% year-to-date as of the close of trading on Wednesday.

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TheStreet Ratings rates NuStar Energy L.P as a buy. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income, reasonable valuation levels, good cash flow from operations 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:
  • NUSTAR ENERGY LP 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. We feel that this trend should continue. During the past fiscal year, NUSTAR ENERGY LP turned its bottom line around by earning $2.14 versus -$2.82 in the prior year. This year, the market expects an improvement in earnings ($3.32 versus $2.14).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 221.8% when compared to the same quarter one year prior, rising from $39.74 million to $127.90 million.
  • Net operating cash flow has significantly increased by 93.57% to $122.58 million when compared to the same quarter last year. In addition, NUSTAR ENERGY LP has also vastly surpassed the industry average cash flow growth rate of -53.19%.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market on the basis of return on equity, NUSTAR ENERGY LP has underperformed in comparison with the industry average, but has exceeded that of the S&P 500.

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Genesis Energy

Dividend Yield: 5.20%

Genesis Energy (NYSE: GEL) shares currently have a dividend yield of 5.20%.

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 45.10.

The average volume for Genesis Energy has been 357,200 shares per day over the past 30 days. Genesis Energy has a market cap of $4.7 billion and is part of the energy industry. Shares are up 9.5% year-to-date as of the close of trading on Wednesday.

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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 38.5%. 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 -53.19%.
  • 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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